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Value relevance of alternative accounting performance measures: Australian evide

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Purpose – The paper aims to examine the value relevance of alternative accounting performance
measures in Australia. It also documents the relative and incremental value relevance of revenue
vis-a` -vis earnings and the longitudinal changes in such value relevance. Finally, the impact of certain
firm characteristics including firm life cycle on the value relevance of revenue and earnings
information is investigated.
Design/methodology/approach – The paper utilises data on Australian listed companies from
1992 to 2005 on the level of and changes in seven alternative accounting performance measures.
Standard ordinary least square regression is conducted.
Findings – Results reveal that: the coefficient estimates on all the performance measures are much
higher for large firms compared to their small firm counterpart; the explanatory power of incremental
revenue in explaining stock returns has declined significantly over the sample period; and life cycle
analysis shows that the combined coefficients for both revenue and earnings are significant in the
growth and maturity stages of the firm life cycle.
Practical implications – When making equity valuation decisions investors consider firms’
fundamentals as reflected in financial statements. However, which line item is more important for
equity valuation is an important consideration. From a regulatory perspective, this stream of research
is quite relevant because standard setters will have evidence from an investor viewpoint about
whether certain line items, subtotals, and totals should be defined in standards and required to be
displayed in financial statements.
Originality/value – The paper adds to the existing capital market research in Australia by
documenting differential persistence of alternative performance measures.

Keywords Australia, Accountancy, Performance measures, Asset valuation, Capital markets

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Informasi Detail

Judul Seri

Accounting Research Journal

No. Panggil

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Penerbit

: Emerald Group., 2010

Deskripsi Fisik

Accounting Research Journal Vol. 23 No. 2, 2010 pp. 190-212

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

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