Articlegold2013

The Value Relevance of Earnings and Book Value: The Importance of Ownership Concentration and Firm Size

55 citations0/0 files storedJournal of Competitiveness

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Financial Reporting and Valuation Research Corporate Finance and Governance Auditing, Earnings Management, Governance

Abstract

The purpose of this paper is to investigate the impact of ownership concentration and firm size on value relevance of two accounting variables, earnings and book value, given by firms listed in Colombo Stock Exchange (CSE) in Sri Lanka from 2005 to 2009.Using pooled cross-sectional data regressions, the study finds that the value relevance of earnings and book value is below average.The value relevance of ownership concentrated firms is higher than that of ownership non-concentrated firms.Further, the two variables show higher value relevance for larger firms than for smaller firms.Contrary to the previous findings of the author, the study finds that book value is more value relevant than the earnings in Sri Lanka.

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References

1968An Empirical Evaluation of Accounting Income Numbers 1995Earnings, Book Values, and Dividends in Equity Valuation*1994Accounting earnings and cash flows as measures of firm performance 1995The information content of losses 1999Have Financial Statements Lost Their Relevance?1997Changes in the value-relevance of earnings and book values over the past forty years 2000Ownership structure and economic performance in the largest european companies 1998Relative valuation roles of equity book value and net income as a function of financial health

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