Balance sheet versus earnings conservatism in Europe
TLDR
In this article, the authors extend prior research on the international analysis of accounting conservatism by examining the level of accounting conservative across eight European countries (the United Kingdom, Germany, France, Switzerland, the Netherlands, Italy, Spain and Belgium).Abstract:
In this study we extend prior research on the international analysis of accounting conservatism (Joos and Lang, 1994; Ball et al., 2000; Giner and Rees, 2001), by examining the level of accounting conservatism across eight European countries (United Kingdom, Germany, France, Switzerland, the Netherlands, Italy, Spain and Belgium), and assessing the statistical significance of the differences among them. The definitions of conservatism that we use are, on the one hand, the Feltham and Ohlson (1995) definition, which implies a persistent understatement of book value of shareholders' equity (balance sheet conservatism). On the other hand, we use the one proposed by Basu (1997), that is, a timelier recognition of bad news in earnings relative to good news (earnings conservatism). We also address the possible scale problems of the models used to measure balance sheet conservatism. Finally, we check whether our comparative results could be influenced by a different sample composition in each country. Our result...read more
Citations
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Earnings Management and Investor Protection: An International Comparison
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TL;DR: In this article, the effects of International Financial Reporting Standards (IFRS) on comparability and relevance of financial reporting in Spain have been investigated, and the results reveal that local comparability has worsened when both IFRS and local accounting standards are applied at the same time.
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The Link Between Earnings Timeliness, Earnings Conservatism and Board Composition: evidence from the UK*
TL;DR: This article examined the links between accounting quality, proxied by earnings timeliness and conservatism, and the composition of the board of directors and found that firms with a higher proportion of outside board members are more likely to recognise bad news in earnings on a timely basis.
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TL;DR: In this paper, the authors analyzed the market valuation of listed Finnish companies through a conventional valuation model combined with responsibility reporting and concluded that responsibility reporting is an important explanatory factor for a company's market value.
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Econometrics of the Basu Asymmetric Timeliness Coefficient and Accounting Conservatism
TL;DR: In this article, the authors analyze the validity of the Basu regression in the context of a model with accounting income incorporating different types of information with different lags, and with noise, and demonstrate that the asymmetric timeliness coefficient varies with firm characteristics affecting their information environments.
References
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A Heteroskedasticity-Consistent Covariance Matrix Estimator and a Direct Test for Heteroskedasticity
TL;DR: In this article, a parameter covariance matrix estimator which is consistent even when the disturbances of a linear regression model are heteroskedastic is presented, which does not depend on a formal model of the structure of the heteroSkewedness.
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Risk, Return, and Equilibrium: Empirical Tests
Eugene F. Fama,James D. MacBeth +1 more
TL;DR: In this article, the relationship between average return and risk for New York Stock Exchange common stocks was tested using a two-parameter portfolio model and models of market equilibrium derived from the two parameter portfolio model.
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Corporate Ownership Around the World
TL;DR: In this paper, the authors use data on ownership structures of large corporations in 27 wealthy economies to identify the ultimate controlling shareholders of these firms, and they find that, except in economies with very good shareholder protection, relatively few firms are widely held, in contrast to Berle and Means's image of ownership of the modern corporation.
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Earnings, Book Values, and Dividends in Equity Valuation*
TL;DR: In this article, a model of a firm's market value as it relates to contemporaneous and future earnings, book values, and dividends is developed and analyzed, and two owners' equity accounting constructs provide the underpinnings of the model: the clean surplus relation applies and dividends reduce current book value but do not affect current earnings.
Posted Content
Corporate Ownership Around the World
TL;DR: In this article, the authors present data on ownership structures of large corporations in 27 wealthy economies, making an effort to identify ultimate controlling shareholders of these firms, and suggest that the principal agency problem in large corporations around the world is that of restricting expropriation of minority shareholders by the controlling shareholders.