 Value Relevance of Inflation-adjusted Equity and IncomeBerna Kirkulak-Uludag and Cagnur Kaytmaz Balsari The International Journal of Accounting, 2009, vol. 44, issue 4, 363-377 Abstract: This paper investigates the role incremental information content of inflation-adjusted data plays in explaining the market value of equity and stock returns on the Istanbul Stock Exchange (ISE). We show the effect of inflation accounting application on basic financial ratios, and we test the value relevance of inflation-adjusted and historical cost-based book value and earnings. The findings show that inflation adjustment affects financial ratios significantly, which may create different risk assessments for the selected firms. Furthermore, the results indicate that both inflation-adjusted and historical cost-based earnings and book values are significantly value relevant. The two sets of data are not to be used as substitutes, but, rather, they are complementary. For this reason, inflation-adjusted data should be required as supplementary data to the historical cost information rather than in place of historical cost data. Keywords: Inflation; accounting; Value; relevance; Historical; cost; Istanbul; Stock; Exchange; (ISE) (search for similar items in EconPapers) Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:eee:accoun:v:44:y:2009:i:4:p:363-377 Access Statistics for this article The International Journal of Accounting is currently edited by A. R. Abdel-Khalik More articles in The International Journal of Accounting from Elsevier |
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