The existing literature proposes a broad spectrum of methodologies to measure firm's superior operating capabilities, referring to them under different names such as 'knowledge assets', 'intellectual capital', 'organisation capital', etc. Through the work reported in this thesis, I intend to contribute to the research field by exploring one specific measure of a firm's operating capabilities proposed by Lev, Radhakrishnan and Zhang (Abacus, 2009). These researchers empirically construct an organisation capital measure and argue it has predictive ability for future performance and is able to explain future abnormal stock returns in the USA. I extend their research to the UK. In doing so, I also critically discuss the organisation capital estimation process and propose potential improvements to the technique. I find evidence of its construct validity in the UK. I examine the organisation capital measure's predictive ability for future performance. The results suggest that this measure is positively associated with future sales growth in the UK. Additionally, the organisation capital measure seems to explain persistence of the operating income and sales of firms in the UK. Via value relevance tests, I obtain empirical evidence that the organisation capital measure is positively associated with equity market value in the UK. Moreover, it is positively associated with the earnings multiplier in value relevance tests. This finding is consistent with empirical evidence that the organisation capital measure is positively associated with one-year ahead earnings and positively affects earnings persistence in such an association in the UK. Finally, I fail to find evidence of the organisation capital measure's ability to explain future excess stock returns in the UK. This suggests that information on firm-specific operating capabilities captured by the organisation capital measure is recognised by the capital market participants and contemporaneously incorporated into stock prices. This result, however, contrasts with the Lev et al. (2009) findings in the USA that organisation capital is mispriced.

<p>This study aims to evaluate the value relevance of Piotroski’s (2000) nine fundamental signals. In order to do this, the signals are tested on the OMX Nordic Exchange Stockholm between the years 2003 and 2009. The hypotheses of the study are whether the signals are value relevant and if the value relevance has changed. To test this, a Chi-square test and a regression are used. The tests show that some signals are value relevant, and that some are not. We also find evidence for a change in the value relevance during the years of the observation. Some explanations to why the value relevance has changed is also discussed.<em></em></p>

This study aims to evaluate the value relevance of Piotroski’s (2000) nine fundamental signals. In order to do this, the signals are tested on the OMX Nordic Exchange Stockholm between the years 2003 and 2009. The hypotheses of the study are whether the signals are value relevant and if the value relevance has changed. To test this, a Chi-square test and a regression are used. The tests show that some signals are value relevant, and that some are not. We also find evidence for a change in the value relevance during the years of the observation. Some explanations to why the value relevance has changed is also discussed.

Problem: Is the free cash flow a value relevant accounting measure in relation to the Swedish stock market? Objective: The aim is that by using an investment strategy to examine whether the free cash flow is an accounting measure that could be perceived as value relevant in relation to the Swedish stock market. Method: The paper is based on a quantitative survey of empirical evidence that has been collected from companies listed on the Large and Mid-Cap lists of the Swedish stock market. Theoretical Frame of reference: value relevance, cash flow, portfolio theory, drive theory Results: It was concluded that the study results conform to the Finnish survey results. The portfolio shows higher returns than the OMX index.

In this study, we look at the effects of the adoption of the revised IAS 1 rules, which has been in effect since January 1, 2009. The revised IAS 1 requires that all changes in equity, excluding changes in equity arising from transactions with owners, should be recognized in comprehensive income statement. Revised IAS 1 requires companies to report total comprehensive income that is a sum of net income and other comprehensive income. Total comprehensive income includes all unrealized gains and losses recognized under IFRS. Before the amendment, some of the unrealized gains and losses were shown in a statement of changes in equity but not in the income statement. We hope to answer the question whether inclusion of the components of other comprehensive income provides investors with useful information. We investigate if stock prices have an association with the components of other comprehensive income. We investigate how effective are attempts of IASB to increase the relevance of accounting information about corporate income. We hope that results from the study will be of interest to the standard-setter. In this study, we use data from annual reports and year-end reports for companies listed on the Large and Mid Cap segment at NASDAQ OMX Stockholm and that covers the years 2009 to 2011. We use two regression models to test value relevance of components of other comprehensive income.We have found some evidence that the share price statistically relates to such component of comprehensive income as the change of the fair value of cash flow hedges. This can also be interpreted as that the change of the fair value of cash flow hedges has some value relevance. We also found some evidence that the share price significantly associates with winning cash flow hedging position. We did not find that the share price associates with some other components of other comprehensive income.

This paper examines the value-relevance of Scandinavian earnings information and book values over the past decade in order to shed some light on whether the extensive global adoption of IFRS/IAS has contributed to an increased accounting quality in terms of economic decision-usefulness to equity investors. We address this research question using a sample of 4.310 firm-year observations for 431 exchange-listed companies at NASDAQ OMX Nordic and Oslo Stock Exchange between 2001 and 2010. The degree of value-relevance in our firm-sample is operationalized through two price regressions and one return regression and empirically tested via the statistical association between capitalized values of equity or annual changes in capitalized values of equity and the study’s three explanatory accounting variables: (i) book values, (ii) accrual-based earnings and (iii) cash-flow-based earnings. Taken as a whole, our results show significant empirical signs of an increased value-relevance in both Scandinavian earnings information and book values, allowing us to draw significant as well as contributing conclusions on the information content of financial statement information disclosed in the Scandinavian region. We believe our study adds empirical substance to practical debates over the function of financial reporting as well as resourceful material to both Scandinavian investors and to the ongoing international discussion on the harmonization of financial reporting standards.

This dissertation examines the financial statement effects of firm attributes on the components of equity, the market reaction effects on key events in the adoption of IFRS, and the cumulative earnings response coefficient effect in the context of IFRS adoption in Canada. Firm attributes were tested for association with the adjustment to retained earnings at the transition date when first adopting International Financial Reporting Standards (IFRS.) Evidence from the analyses of the adjustment to retained earnings model revealed a statistically significant association between the adjustment to retained earnings and the firm attributes of volatility of income, internationality, and firm industry. Market reaction was measured for two key events of IFRS adoption: early adoption announcement and the release of first quarter financial results under IFRS. A negative mean for Cumulative Average Return (CAR) resulted from tests of both events. However, only the negative mean CAR from market’s reaction to the release of first quarter financial results under IFRS demonstrated statistical significance. The adjustment to retained earnings model used in this study developed a benchmark for tests of value relevance. In the test of value relevance, the benchmark or unexpected adjustment to retained earnings was tested against the actual adjustment to retained earnings for market reaction. The results from the tests of value relevance were not statistically significant. This study contributes to the literature by identifying firm factors: volatility of income, internationality, and industry as firm factors associated with the adjustment to retained earnings upon adoption of IFRS. Further, evidence from the event study demonstrates that the market reacts negatively to the adoption of IFRS and suggests that the Canadian market may not perceive IFRS as an improvement in financial reporting or a reduction in information asymmetry.

In capital market research (CMR) studies of the value relevance of accounting numbers are founded upon the concept that, in equilibrium, the book values are equal to or have some long-term relationship with the market value and that market returns are related to book returns. This thesis seeks to resolve a gap in the CMR by examining 30 selected individual firms listed on the Australian stock market during the period 1950 to 2004, using equilibrium correction modelling techniques. Even these limited prior works used cross-sectional techniques rather than the long-run, time-series, analysis used in this study. Moreover, dynamic analysis in the CMR has tended to focus on indexes or portfolio data rather than using firm-specific case study data of the type modelled here. No prior research has taken this approach using Australian data. The results of this thesis indicated that an equilibrium correction relationship between market values and book values for firms listed on the Australian Stock Exchange (ASX) could be determined by using accounting and macroeconomic regressors. The findings of the thesis were consistent with the literature in terms of the variables suggested and important in the firm's valuation from the three main approaches, the analysts (industry) approach, the finance and accounting theory (textbook) approach and the CMR literature approach. The earnings, dividends and book value variables are significant in their relationships with the firm's market values. The models constructed were typically more informative and had an increased forecasting performance compared with the a priori models tested, based on theory and the literature.

[Truncated abstract] Following the introduction in 1999 of Australian Accounting Standard Board (AASB) 1041: 'Revaluations of Non-Current Assets' (Australian Accounting Standards Board 2001a), this study set out to examine the impact of the introduction of this new standard on: the number (percentage) of Australian firms revaluing various classes and submajor classes of non-current assets; and the value relevance and reliability of the information provided with respect to various sub-major classes of non-current assets. The study also set out to examine the apparent motivations for Australian companies electing the fair value (FV) basis, rather than the historic cost (HC) basis, for reporting property, plant and equipment (PP&E). The sample analysed in this study consisted of Australian Stock Exchange (ASX) listed firms that were included in each of the Connect4, Aspect Financial and Core Research Data (CRD) databases. After excluding firms not covered by all three databases and firms where there were missing data problems, 398 and 424 firms were left in the 1999 and 2002 samples, respectively. Of the 398 and 424 firms, there were 194 firms that were common to both sample periods and a separate analysis of these 'common' firms allowed a 'like-for-like' comparison to be made. The financial year ending June 30, 1999 provides data under the previous standard AASB 1010 (Australian Accounting Standards Board 2000) before the introduction of AASB 1041, while the financial year ending 30 June 2002 provides data under AASB 1041 (the new standard). ... At the disaggregated level (that is, for various sub-major classes of non-current assets), it appears that there was a decline in the number (percentage) of firms choosing to revalue investment property, property, and plant and equipment, while there was no change in the number (percentage) of firms choosing to revalue listed or unlisted investments. It appears that AASB 1041's requirement to revalue frequently when the FV basis was adopted discouraged firms from choosing the FV basis for some asset classes, presumably because the costs associated with frequent revaluations outweighed the perceived benefits. In terms of value relevance, the results suggest that where the variables of interest are scaled there was no improvement in the value relevance of the information provided by Australian companies following the introduction of AASB 1041. However, the results from the unscaled regressions do not support this conclusion and instead suggest that the introduction of AASB 1041 was associated with an overall improvement in the value relevance of the information provided with respect to the various sub-major classes of non-current assets investigated in this study. Resolution of this conflicting result is beyond the scope of this dissertation and is an issue worthy of future research. In terms of reliability, the results suggest that the introduction of AASB 1041 was generally associated with: an improvement in the reliability of information reported with respect to non-current assets reported at FV; and a deterioration in the reliability of information reported with respect to non-current assets reported at HC. Finally, with respect to the potential motivations behind a company's choice of the FV basis for reporting PP&E, the results suggest that firms are motivated to revalue PP&E to: improve their borrowing capacity; for signalling purposes; and to reduce information asymmetry.

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No. of bitstreams: 1 arquivototal.pdf: 1113682 bytes, checksum: 2a8dacf3d22e347aed3ac29b08cefb2c (MD5) Previous issue date: 2015-02-24 / Coordenação de Aperfeiçoamento de Pessoal de Nível Superior - CAPES / The propose of this research was to analyze the reflection of the quality of Corporate Governance on the process of valuation in Brazilian capital market, considering the Ohlson (1995) model. Was resorted to the data of all companies that traded their shares on the BM&FBOVESPA in the period of 2010-2013. For this, a model of valuation was used, which includes a proxy variable for the quality of Corporate Governance, the Index Quality of Corporate Governance (IQGC), based on the agency theory (JENSEN; MECKLING, 1976), which dimensions were included to minimize the agency problems, which were: Composition of the Board of Directors, Ownership Structure and Control Incentive to Directors, Disclosure, Investor Protection, Audit Committee and Asymmetric Information. Among the dimensions Disclosure was the one that had the higher frequency compared to the others companies, however the Audit Committee obtained the lowest frequency. The IQGC was calculated by Principal Component Analysis (PCA), which consists in a weighted average of the principal generated components with the weights given by their respective variances. The analysis on the IQGC behavior, over the analysis period, showed a growth trend in the level of quality of corporate governance on the companies. To assess the relevance of IQGC in the process of valuation has been included in this proxy model residual income valuation (RIV) of Ohlson (1995), business valuation model based on financial variables that allow the inclusion of 'other information' that may represent factors that are important for the valuation, but that have not been reflected by the variables used. The analysis results of the data in balanced panel model also shows that the quality of corporate governance is value relevant in the Brazilian capital market, once that the model had his coefficient of determination increased with the entry of this variable, which was confirmed by the Wald test. In addition to, the intrinsic characteristics of the companies sought to investigate whether the results persist when analyzed: Size and Liquidity. The results revealed that the only evidence remain on medium size companies and among those with lower liquidity, which can be associated to the specific characteristics of Brazilian market. Given the evidence, we can not reject the hypothesis that the quality of Corporate is value relevant for the valuation in the Brazilian capital market. The result of this study are limited to the sample and the period analyzed. / O objetivo desta pesquisa foi analisar o reflexo da qualidade de Governança Corporativa sobre o processo de avaliação de empresas no mercado brasileiro de capitais, considerando o modelo de Ohlson (1995). Recorreu-se aos dados disponíveis de todas as empresas que negociaram suas ações na BM&FBOVESPA no período de 2010 a 2013. Para isso, foi utilizado um modelo de avaliação de empresas com a inclusão de uma variável proxy para a qualidade de Governança Corporativa, o Índice de Qualidade de Governança Corporativa (IQGC), construído com base na Teoria da Agência (JENSEN; MECKLING, 1976), no qual foram compreendidas dimensões destinadas a minimizar os problemas de agência, quais foram: Composição do Conselho de Administração, Estrutura de Propriedade e de Controle, Incentivo aos Administradores, Disclosure, Proteção aos Investidores, Comitê de Auditoria e Assimetria de Informação. Dentre as dimensões, Disclosure foi aquela que obteve maior frequência entre as empresas, por outro lado, a dimensão Comitê de Auditoria obteve menor frequência. O IQGC foi calculado mediante Análise de Componentes Principais (ACP), que consiste em uma média ponderada dos principais componentes gerados, sendo os pesos dados pelas suas respectivas variâncias. A análise do comportamento do IQGC, ao longo do período analisado, revelou uma tendência de crescimento no nível de qualidade da Governança Corporativa das empresas. Para avaliar a relevância do IQGC no processo de avaliação de empresas, foi inserida essa proxy no modelo Residual Income Valuation (RIV) de Ohlson (1995), modelo de avaliação de empresas baseado em variáveis financeiras que permite a inserção de “outras informações” que possam representar fatores que são importantes para a avaliação de empresas, mas que ainda não foram refletidos pelas variáveis usualmente utilizadas. A análise dos resultados do modelo com dados em painel balanceado permitiu inferir que a qualidade de Governança Corporativa é value relevante no mercado brasileiro de capitais, uma vez que o modelo teve o seu coeficiente de determinação acrescido quando da inserção desta variável, o que foi confirmado pelo teste de Wald. De forma adicional, buscou-se investigar se os resultados persistiam quando analisadas as características intrínsecas das empresas: tamanho e liquidez. Os resultados revelaram que as evidências persistem apenas entre as empresas de tamanho médio e entre aquelas de menor liquidez, o que pode estar associado às características específicas do mercado brasileiro. Diante dessas evidências, não se pode rejeitar a hipótese de que a qualidade de Governança Corporativa é value relevant para a avaliação de empresas no mercado brasileiro de capitais. Os resultados obtidos nesse trabalho são limitados à amostra e ao período analisados.