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Value relevance of earnings and book value in India: significance of accounting reforms and intangible-intensity in an emerging market

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  • Pooja Kumari
  • Chandra Sekhar Mishra

Abstract

The study investigates the value relevance of earnings and book value on the Bombay Stock Exchange over 21 years of accounting regulation reforms in India from 1995 to 2015. In developed markets accounting information has lost its relevance due to shift in economies from tangible to intangible intensity. However, the relevance of accounting information in an emerging market increases with the improvements in accounting regulation and market environment. Thus, we also examined the effects of both accounting regulation reforms and intangible intensity on the relevance of earnings and book value in an emerging market. Results indicate that the relevance of the combined and incremental value of both earnings and book value is increased with the improvements in accounting regulation reforms in India. Furthermore, the intangible intensity is positively (negatively) significant to explain the change in the incremental explanatory power of earnings (book value).

Suggested Citation

  • Pooja Kumari & Chandra Sekhar Mishra, 2018. "Value relevance of earnings and book value in India: significance of accounting reforms and intangible-intensity in an emerging market," International Journal of Accounting, Auditing and Performance Evaluation, Inderscience Enterprises Ltd, vol. 14(4), pages 364-387.
    • Handle: RePEc:ids:ijaape:v:14:y:2018:i:4:p:364-387
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    Cited by:

    1. Eduardo Flores & Joelson Oliveira Sampaio & Aziz Xavier Beiruth & Aldy Fernandes da Silva, 2020. "Earnings Transparency, Cost of Debt and Cost of Equity: A Cross-Country Examination," International Business Research, Canadian Center of Science and Education, vol. 13(10), pages 115-115, October.

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