The value relevance of earnings and book value across the EU. A comparative Analysis

Alessandro Mechelli and Riccardo Cimini

FINANCIAL REPORTING, 2014, vol. 2014/2-3-4, issue 2-3-4, 83-113

Abstract: This paper aims to investigate whether the value relevance of accounting amounts differs across nations depending on the country characteristics identified by Nobes (2008) and Nobes and Parker (2010) that is the source of funds, the legal system and the fiscal legislation that led them to identify, in the EU, the so-called strong-equity and the weak-equity countries. Because of the different disclosure needs, our hypothesis is that insiders, within the strong-equity countries, disclose more relevant information than in weak-equity countries. To test this hypothesis, we analysed a sample including all the listed entities belonging to the EU at the time of the issuance of EU Regulation 1606/2002. The sample covered the period of 2006-2011 and included 16,513 firm-year observations. Our sample selection strategy allowed us to include entities required to comply with the same accounting standards (IAS/IFRS), so our findings do not depend on differences between requirements of different standard setters. Comparatively, our findings demonstrate that the value relevance of accounting amounts not only is higher in strong-equity countries than in weak-equity countries - validating our research hypothesis - but also that it is not driven by specific firms? characteristics that are the size, the future growth opportunity and the source of funds of the single entity.

Date: 2014
References: View references in EconPapers View complete reference list from CitEc
Citations: View citations in EconPapers (1)

Downloads: (external link)
http://www.francoangeli.it/riviste/Scheda_Rivista. ... 428&Tipo=ArticoloPDF (text/html)
Single articles can be downloaded buying download credits, for info: https://www.francoangeli.it/DownloadCredit

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:fan:frfrfr:v:html10.3280/fr2014-002004

Ordering information: This journal article can be ordered from
http://www.francoang ... o.aspx?IDRivista=163

Access Statistics for this article

FINANCIAL REPORTING is currently edited by FrancoAngeli

More articles in FINANCIAL REPORTING from FrancoAngeli Editore
Bibliographic data for series maintained by Stefania Rosato ().