Accounting Fundamentals

Costly arbitrage and the convergence of price to accounting fundamentals

This paper examines the impact of arbitrage costs on the level and duration of the disparity between price and accounting information about firm value. Arbitrage costs are expected to increase the disparity between price and value. However, by increasing the potential rewards to the arbitrageur, arbitrage costs may not necessarily impede the longer-term convergence of price to value. I use the ...

The usefulness of accounting fundamentals and other prospectus information in the valuation of IPO firms

† We acknowledge the useful comments from Nerissa Brown, Woo-Jin Chan, Jeff Coulton, Neil Fargher, Sarah McVay, Gil Sadka, Andreas Simon and participants at the AFAANZ Annual Conference in 2005. This work was started by Andrew Lynch as part of his honour’s thesis at the University of Melbourne, and completed while Asher Curtis and Julian Yeo were PhD students at the University of New South Wale...

The Relevance of Using Accounting Fundamentals in the Mexican Stock Market

This paper examines the value relevance of accounting fundamentals in the Mexican Stock Market ([BMV] – Bolsa Mexicana de Valores). The research question that motivated the paper was: Can accounting fundamentals provide relevant information to better understand firm value? More specifically, the paper examines whether the application of an accounting fundamental strategy to select stocks of a p...

Accounting History and Accounting Progress

A. C. Littleton famously described accounting as “relative and progressive”. However, in recent historical accounting research, there has been increasing hesitation in describing accounting as “progressing”. This is largely because “progress” implies a degree not only of change but also of improvement, and historical accounting researchers, influenced by social science conventions, often regard...

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