Does the information environment affect the value relevance of financial statement data?

Aleksanyan, M. (2009) Does the information environment affect the value relevance of financial statement data? Applied Economics Letters, 16(8), pp. 835-839. (doi: 10.1080/13504850701221972)

Abstract

Recent studies demonstrate that the usefulness of financial statement data for valuation of stocks varies depending on specific economy- and firm-level conditions. This empirical study identifies a novel firm-level influential condition. It hypothesizes and finds that for firms that trade at a premium to book value the value-relevance of two fundamental financial statement value drivers (i.e. earnings and book value), is negatively related to the level of sophistication of the firm's information environment. However, for firms that trade at a discount to book value, the level of sophistication of information environment does not affect the value-relevance of these financial statement value drivers. The level of complexity of the firm's information environment is proxied by the firm's capitalized value. The empirical analysis is based on a sample of nonfinancial firms listed on the London Stock Exchange.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Aleksanyan, Dr Mark
• Authors: Aleksanyan, M.
• Subjects: H Social Sciences > HB Economic Theory
• College/School: College of Social Sciences > Adam Smith Business School > Accounting and Finance
• Journal Name: Applied Economics Letters
• Publisher: Taylor & Francis
• ISSN: 1350-4851
• ISSN (Online): 1466-4291
• Copyright Holders: Copyright © Taylor and Francis 2009
• First Published: First published in Applied Economics Letters 16(8):835-839
• Publisher Policy: Reproduced in accordance with the copyright policy of the publisher.