Value-Relevance of Accounting Information for Intangible-Intensive Industries and the Impact of Scale Factor
نویسنده
چکیده
Prior research suggests that accounting information is not useful when valuing firms with large amount of intangibles (Amir and Lev (1996)). However, using R from regression of earnings and book values on prices, Collins et al. (1997) (hereafter CMW) find that value-relevance for intangible-intensive industries is as high as not intangibleintensive. An explanation for the discrepancy between Amir and Lev (1996) and CMW is that the high value-relevance for intangible-intensive industries documented by CMW is due to not controlling for the differences in scale (Brown et al. (1999)). Consistent with this explanation, we find that, once we control for scale factor, R is approximately 30% lower for intangible-intensive than not intangible-intensive industries. In addition, we find that the intertemporal decline in value-relevance for all industries documented by Brown et al. (1999) is due to intangible-intensive industries suggesting that intangibleintensive industries are substantially affecting the evolution of characteristics of financial reporting system as a whole. Value-Relevance of Accounting Information for Intangible-Intensive Industries and the Impact of Scale Factor
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