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Do Macro-economic Crises Determine Accounting Value Relevance?

Author

Listed:
  • F. Ayzer Bilgic
  • Sandra Ho
  • Allan Hodgson
  • Zhengling Xiong

Abstract

We investigate whether the value relevance of earnings and book values in Turkey significantly changed across periods of financial uncertainty. Our enquiry differs from the mainstream literature that posits a unidirectional association determined by the ‘quality’ of individual firm accounts towards price. We find divergence in accounting value relevance components across the 1997–2012 period. Dominant value relevance shifts from earnings and negative interest rates in hyper-inflation, to the balance sheet after IFRS in 2005. On the other hand, the global financial crisis (GFC) is associated with diminished accounting value relevance for all variables. Policy issues are raised about value relevance consistency, the use of negative (low) interest rates as fiscal policies and the asymmetric application of market based valuations in emerging economies.

Suggested Citation

  • F. Ayzer Bilgic & Sandra Ho & Allan Hodgson & Zhengling Xiong, 2018. "Do Macro-economic Crises Determine Accounting Value Relevance?," Accounting in Europe, Taylor & Francis Journals, vol. 15(3), pages 402-422, September.
    • Handle: RePEc:taf:acceur:v:15:y:2018:i:3:p:402-422
    DOI: 10.1080/17449480.2018.1514123
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