We extend prior research on the value relevance of accounting information for lossmaking firms by allowing the coefficient of book value to vary across three distinct set of loss-making firm observations in our valuation model. Our key findings are, first, that book value is a less important determinant of equity value for either high R&D-intensive firms or dividend-paying firms, relative to fi...

Acknowledgments We gratefully acknowledge the comments of Sudipta Basu, Christian Leuz and Jerry Zimmerman, the referee, and workshop participants at the Universities of Amsterdam and Chicago. We are grateful for financial support from the University of Chicago, Graduate School of Business. Abstract We provide a simple test of " costly contracting " and " value relevance theories " of accountin...

There are two approaches which investors can exercise when using accounting information are commonly discussed, either to the use of financial reporting to value the company or the use of financial reporting to assess the management's stewardship of the company. Despite the fact that US GAAP, IFRS, and UK GAAP are all market oriented sets of accounting standards, both FASB and IASB are more inc...

some of inherent limitations of accrual accounting make the actual earnings and accounting earnings different. so assessment of reported earnings quality has allocated extensive bulk of accounting studies to itself. the decrease information quality such as earnings quality increases information risk and also the investor’s risk. it’ll increase their expected return. since cost of equity is the ...

We examine the valuation performance of a comprehensive list of value drivers and find that multiples derived from forward earnings explain stock prices remarkably well: pricing errors are within 15 percent of stock prices for about half our sample. In terms of relative performance, the following general rankings are observed consistently each year: forward earnings measures are followed by his...