The impact of accounting of securities valuation on stock returns: the case of Greece

Christos Tzovas, Constantinos Chalevas and Apostolos Ballas

Journal of Applied Accounting Research, 2010, vol. 11, issue 3, 180-194

Abstract: Purpose - The purpose of this paper is to investigate the market reaction to the accounting treatment of the marking‐to‐market of equity investments of Greek firms during the period 2002‐2004. Design/methodology/approach - Using data for firms listed in the ASE, a treatment effects model of returns on control variables, the valuation adjustment and a dummy for the accounting treatment which is modeled as conditional to profitability, size and leverage. Findings - It is found that firms chose to take valuation losses through equity but the market considered this treatment as a negative signal. The paper concludes that although market behavior is consistent with the efficient markets hypothesis, managerial behavior is more consistent with the mechanistic hypothesis. Originality/value - This study contributes to understanding the factors that influence the accounting policy decisions of firms listed in the Athens Stock Exchange. In addition, this study contributes to evaluating the IASB's decision to give issuers of reclassify financial the ability to reclassify them.

Keywords: Accounting policy; Securities; Stock returns; Greece (search for similar items in EconPapers)
Date: 2010
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Persistent link: https://EconPapers.repec.org/RePEc:eme:jaarpp:v:11:y:2010:i:3:p:180-194

DOI: 10.1108/09675421011088125

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