 The value relevance of earnings disaggregation provided in the Spanish profit and loss accountBegona Giner and Carmelo Reverte European Accounting Review, 1999, vol. 8, issue 4, 609-629 Abstract: This study analyses the value relevance of the different components of the earnings figure that appear in the Spanish profit and loss account in order to determine the preferred level of disaggregation by investors. It is considered that the disaggregation may help to evaluate the earnings quality; that is, its predictive ability about future earnings. We use a valuation model based on Ohlson (1995), which models firm value as a function of book value of equity and earnings, adding the earnings components to determine whether they provide incremental price-relevant information beyond aggregate earnings. In addition, we allow the parameters to vary under some firm-specific circumstances. Our results support the usefulness of the earnings decomposition for valuation purposes, resting primarily on the disclosure of the corporation tax, particularly for either small companies, or with a high-risk profile or with low persistence of earnings. It seems that neither financial profit nor extraordinary earnings have additional information content over the bottom-line figure, which is consistent with the IASC's position on ordinary versus extraordinary items. Date: 1999 Downloads: (external link) Related works: Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text Persistent link: https://EconPapers.repec.org/RePEc:taf:euract:v:8:y:1999:i:4:p:609-629 Ordering information: This journal article can be ordered from Access Statistics for this article European Accounting Review is currently edited by Laurence van Lent More articles in European Accounting Review from Taylor & Francis Journals |
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