International Journal of Economic Behavior and Organization
Volume 1, Issue 6, December 2013, Pages: 69-77
Received: Dec. 31, 2013;
Published: Feb. 20, 2014
Views 3170 Downloads 303
Bita Mashayekhi, Associate Professor of Accounting, Faculty of Management, University of Tehran, Tehran, Iran
Omid Faraji, PhD Student of Accounting, Faculty of Management, University of Tehran, Tehran, Iran
Arash Tahriri, Assistant Professor of Accounting, University of Tehran, Tehran, Iran
In this study the effect of accounting disclosure on value relevance in different stages of firm life cycle has been investigated. In order to do so, 101 companies listed on the Tehran Stock Exchange (Iran) between years 2005 to 2011 were chosen as sample. The sample firms were classified into four stages in the life cycle as Introduction, growth, maturity and Shake-Out (decline), by taking benefit from the cash flows pattern as a proxy for firm life cycle. Then in each of these stages of life cycle, the firms were classified into as high or low disclosure quality. The results of regression in ordinary least squares and Wald Test methods (to examine the significance of difference in the adjusted R squares) indicate that the relation between earnings and changes in earnings with stocks return (value relevance model) among the high and low quality disclosing companies at each stages of the life cycle are not significantly different from each other.
Accounting Disclosure, Value Relevance and Firm Life Cycle: Evidence from Iran, International Journal of Economic Behavior and Organization.
Vol. 1, No. 6,
2013, pp. 69-77.
Anthony J. H., Ramesh K. ( 1992). Association between Accounting Performance Measures and Stock Prices A test of the life cycle hypothesis . Journal of Accounting and Economics; 15: 203-27.
Banghøj, J. and T. Plenborg. (2008). Value relevance of voluntary disclosure in the annual report. Accounting and Finance 48(2): 159.
Barth, M. and G. Clinch. (1996). International accounting differences and their relation to share prices: Evidence U.K., Australian, and Canadian firms. Contemporary Accounting Research 13(1): 135.
Black E.L.(1998). Life-Cycle Impacts on the Incremental Relevance of Earnings and Cash flow Measures. Journal of Financial Statement Analysis; 40-56.
Botosan, C. A., & Plumlee, M. A. (2002). A re-examination of disclosure level and the expected cost of equity capital. Journal of Accounting Research, 40(1), 21-40.
Dickinson,V.(2011). cash flow patterns as a proxy for firm life cycle, accounting review, Vol. 86, No. 6, pp. 1969–1994
Easton, P. and T. Harris. (1991). Earnings as Explanatory Variables for Returns. Journal of Accounting Research, Vol. 29 (Spring), pp. 19–36.
Gjerde, O., K. H. Knivsflå, et al. (2005). The Value-Relevance of Financial Reporting on the Oslo Stock Exchange over the Period 1964-2003. Discussion Papers 2005/23, Department of Finance and Management Science, Norwegian School of Economics and Business Administration.
Hassan, O., P. Romilly, et al. (2009). The value relevance of disclosure: Evidence from the emerging capital market of Egypt. The International Journal of Accounting 44(1), 79.
Healy, P. M., Hutton, A. P., & Palepu, K. G. (1999). Stock performance and intermediation changes surrounding sustained increases in disclosure. Contemporary Accounting Research, 16(3), 485−520.
Healy, P. & Palepu, K. ( 2001).Information Asymmetry, Corporate Disclosure, and the Capital Markets: A Review of Empirical Disclosure Literature. Journal of Accounting and Economics, 31, 485-520.
IASB (2001). International Accounting Standards Board, Framework for the Preparation and Presentation of Financial Statements. IASB, London, UK.
Jenkins David S., Kane Gregory D. and Velury Uma (2009).Earnings Conservatism and Value Relevance Across the Business Cycle. Journal of Business Finance & Accounting.
Leuz, C.(2004). Proprietary Versus Nonproprietary Disclosures: Evidence from Germany, in Leuz C., D. Pfaff and A. Hopwood.The Economics and Politics of Accounting
Lundholm, R. and L. Myers (2002). Bringing the future forward: The effect of disclosure on the returns-earnings relation. Journal of Accounting Research, 40(3): 809.
Myers, S.C. (1977).Determinants of Corporate Borrowing. Journal of Financial Economics, 5, pp. 147-175.
Ohlson, J. A. (1995). Earnings, book values, and dividends in equity valuation. Contemporary Accounting Research 11(2): 661.
Piotroski, J. (2003). Discretionary Segment Reporting Decisions and the Precision of Investor Beliefs.Working Paper, University of Chicago.