Volume 2, Issue 2 (Spring 2016)
Infect Epidemiol Med 2016, 2(2): 59-72 |
Back to browse issues page
Download citation:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
BibTeX | RIS | EndNote | Medlars | ProCite | Reference Manager | RefWorks
Send citation to:
Amri-Asrami M, Aghaei M. The dynamics of accounting information on stock valuation: An Analysis Based on industry. Infect Epidemiol Med 2016; 2 (2) :59-72
URL: http://journalsystem.ir/article-1-64-en.html
URL: http://journalsystem.ir/article-1-64-en.html
1- Management & Economics Faculty, Tarbiat Modares University, Tehran, Iran
2- Management & Economics Faculty, Tarbiat Modares University, Tehran, Iran , aghaim@modares.ac.ir
2- Management & Economics Faculty, Tarbiat Modares University, Tehran, Iran , aghaim@modares.ac.ir
Abstract: (4748 Views)
Industrial groups have interactions within and outside the groups. In this paper to evaluate linear information dynamics, twelve industrial groups of companies listed in Tehran Stock Exchange are used. Two measures of conservatism are used, that is, ratio of sum of price and sum of book value and mean of price-to-book ratio. In the sample periods, to remedy the effects of special factors in the sample industries, the later ratio is de-trended and also to control the effects of each industry, inflation, and some other factors on the various industry indices, two measures are used i.e. the average annual difference between price and book value, and index each industry. Industry analysis shows that the criterion of "sum of price to sum of book value" has a significant correlation and in the opposite, the correlation would be stronger, using the de-trended average of market value to book value the results. Finally, compared to scaled variables on the average annual difference between price and book value, scaled variables based on the index of each industry led to a much stronger results for the coefficient of valuation models based on industry. Therefore, for assessment and analysis of linear information dynamics on industrial groups, with the inclusion of environmental factors such as conservatism in accounting policies, industry, stock market indices, the rate of cost of capital, inflation, the policy of dividend distribution, past and present of book value and price papers, can be used to residual income valuation models.
Keywords: Information dynamics, Stock valuation, Accounting conservatism, Accounting earnings, Industry
Type of Study: Research |
Received: 2017/08/28 | Accepted: 2017/08/28 | Published: 2017/08/28
Received: 2017/08/28 | Accepted: 2017/08/28 | Published: 2017/08/28
References
1. 1- Fiegenbaum, A. and Thomas, H. (1993). Industry and strategic group dynamics: competitive strategy in insurance industry, 1970-84. Journal of Management Studies, 30: 69–105. doi:10.1111/j.1467-6486.1993.tb00296.x.
2. 2- Rajabi, A. and Moosavi-Haghighi, M. H., (2013). Appraisal and Calculation of Industrial Groups with Applying the System Dynamics Approach in 2024 Iran Vesion. Management Research in Iran, Vol. 17, No.3, pp. 87-111, 2013 [In Persian].
3. 3- Dalton, D. R.; Daily, C. M.; Johnson, J. L.; Ellstrand, A. E. (1999). Number of Directors and Financial Performance: A Meta-Analysis doi: 10.2307/256988 vol. 42 no. 6. 674-686.
4. 4- Mascarenhas, B. (1989). Strategic Group Dynamics. Academic Management Journal. vol. 32 no. 2 pp. 333-352.
5. 5- Forsyth, D.R. (2009). Group Dynamics. New York: Wadsworth
6. 6- Backstrom, L.; Huttenlocher, D.; Kleinberg, J.; Lan, X. (2006). "Group formation in large social networks". Proceedings of the 12th ACM SIGKDD international conference on Knowledge discovery and data mining - KDD '06. p. 44.
7. 7- Khadivar, A., and Javaheri, S. (2015). System Dynamics simulation for Developing and intenerating knowledge management and Knowledge strategy. Management Research in Iran, Vol. 19, No.1, pp. 117-146, 2015 [In Persian].
8. 8- Weil, H.B. (2007) “Application of system dynamics to corporate strategy: An evolution of issues and frameworks”, System Dynamics Review, Vol. 23, issue:2-3, pp. 137-156.
9. 9- Myers, J. (1999), ‘Implementing Residual Income Valuation with Linear Information Dynamics’, The Accounting Review, Vol. 74 (1), pp. 1–28.
10. 10- Ashton D. and Wang, P. (2013). ‘Valuation Weights, Linear Dynamics and Accounting Conservatism: An Empirical Analysis’, Journal of Business Finance & Accounting, 40(1) & (2), 1–25.
11. 11- Frankel, R. and C. M. C. Lee (1998), ‘Accounting Valuation, Market Expectation, and Cross-sectional Stock Returns’, Journal of Accounting and Economics, Vol. 25, pp. 283–319.
12. 12- Ashton D., T. Cooke, M. Tippett and P. Wang. (2004). Linear information dynamics, aggregation, dividends and ‘dirty surplus’ accounting. Accounting and Business Research. Vol. 29 (3), pp. 287–320.
13. 13- Ohlson, J. (1995), ‘Earnings, Book Values, and Dividends in Equity Valuation’, Contemporary Accounting Research, Vol. 11 (2), pp. 661–87.
14. 14- Ashton, D., T. Cooke and M. Tippett. (2003). An Aggregation Theorem for the Valuation of Equity under Linear Information Dynamics. Journal of Business Finance and Accounting. Vol. 57, Issues 2–3. Pp. 218–240.
15. 15- Feltham G. and J. Ohlson (1995), ‘Valuation and Clean Surplus Accounting for Operating and Financial Activities’, Contemporary Accounting Research, Vol. 11 (2), pp. 689–732.
16. 16- Stark, A. W. (1997). 'Linear information dynamics, divided irrelevance, corporate valuation and the clean surplus relation'. Accounting and Business Research. Vol, 27(3). Pp. 219-228
17. 17- Ohlson, J. (1999) ‘On Transitory Earnings’, Review of Accounting Studies, Vol. 4, pp. 145–162.
18. 18- Pope, F. P. and P. Wang (2005), ‘Earnings Components, Accounting Bias and Equity Valuation’, Review of Accounting Studies, Vol. 10, pp. 387–407.
19. 19- Clubb, C. (2012), ‘Information Dynamics, Dividend Displacement, Conservatism and Earnings Measurement: A Development of the Ohlson (1995) Valuation Framework’, Review of Accounting Studies. Vol. 18, 360-385.
20. 20- Ashton D. and P. Wang (2008), ‘Valuation Weights and Accounting Conservatism’, Available at SSRN.
21. 21- Ghalibaf-Asl, H., Mohammadi, Sh,. and Mazaheri-Far, P. (2012). Analyzing Stock Return Comovement in Tehran Stock Exchange Using APT Approach. Management Research in Iran, Vol. 16, No.1, pp. 93-106, 2012 [In Persian].
22. 22- Feltham G. and Ohlson J. (1996), ‘Uncertainty Resolution and the Theory of Depreciation Measurement’, Journal of Accounting Research, Vol. 34 (2), pp. 209–234.
23. 23- Givoly, D., C. Hayn and A. Natarajan (2007), ‘Measuring Reporting Conservatism’, the Accounting Review, Vol. 82 (1), pp. 65–106.
24. 24- Pae, J., D.B. Thornton and M. Welker (2005), ‘The Link between Earnings Conservatism and the Price-to-book Ratio’, Contemporary Accounting Research, Vol. 22 (3), pp. 693–717.
25. 25- Khan, M. and R. Watts (2009), ‘Estimation and Validation of a Firm-year Measure of Conservatism’, Journal of Accounting and Economics, Vol. 48, pp. 132–150.
26. 26- Watts, R. (2003a), ‘Conservatism in Accounting Part I: Explanations and Implications’, Accounting Horizons, Vol. 17 (3), pp. 207–221.
27. 27- Watts, R. (2003b), ‘Conservatism in Accounting Part II: Evidence and Research Opportunities’, Accounting Horizons, Vol. 17 (4), pp. 287–301.
28. 28- Ashton, D., K. Peasnell and P. Wang (2011), ‘Residual Income Valuation Models and Inflation’, European Accounting Review, Vol. 20 (3), pp. 459–483.
29. 29- Ashton D. and Wang, P. (2015) Conservatism in residual income models: theory and supporting evidence, Accounting and Business Research, 45:3, 387-410.
30. 30- Basu, S. (1997), ‘The Conservatism Principle and the Asymmetric Timeliness of Earnings', Journal of Accounting and Economics, Vol. 24, pp. 3–37.
31. 31- Lintner, J. (1956), ‘Distribution of Incomes of Corporations among Dividends, Retained Earnings and Taxes’, American Economic Review, Vol. 46, pp. 97–113.
32. 32- Einstein A. (1956). Investigations on the Theory of the Brownian movement. R. Fürth (Ed.)Dover, New York. (English translation of preceding reference.)
33. 33- Mörters, P.; Peres, Y. (2008). Brownian motion (Draft Version). Retrieved 25.
34. 34- Mandelbrot, B.; Hudson, R. (2004). The (Mis)behavior of Markets: A Fractal View of Risk, Ruin, and Reward.
35. 35- Hughes, J., J. Li and M. Zhang (2004), ‘Valuation and Accounting for Inflation and Foreign Exchange’, Journal of Accounting Research, Vol. 42, pp. 731–754.
36. 36- Callen, J.L. & Morel. (2001). Linear Accounting Valuation When Abnormal Earnings Are AR(2). Review of Quantitative Finance and Accounting. Vol. 16 (3). pp 191–204.
37. 37- Penman, S. H. (2013). Financial statement analysis and security valuation (fifth ed.). New York: McGraw-Hill.
38. 38- Cooley, T. F. & Quadrini, V. (2001). Financial Markets and Firm Dynamics. The American Economic Review. Vol. 91, No. 5, pp. 1286-1310.
39. 39- Franzen, L. and S. Radhakrishnan (2009), ‘The Value Relevance of R&D across Profit and Loss Firms’, Journal of Accounting and Public Policy. Vol. 28(1), pp. 16–32.
40. 40- Stark, A. W. (2008), ‘Intangibles and Research. An Overview with Specific Focus on the UK’, Accounting and Business Research, Vol. 38 (3), pp. 275–285.
41. 41- Bernard, A. B. and S. N. Durlauf (1996), ‘Interpreting Tests of Convergence’, Journal of Econometrics, Vol. 71, pp. 161–173.
42. 42- Fama, E. F. and French, K. R. (1995), ‘Size and Book-to-market Factors in Earnings and Returns’, Journal of Finance. Vol. 50 (1), pp. 131–155.
43. 43- Penman S. and X. Zhang (2002), ‘Accounting Conservatism, the Quality of Earnings and Stock Returns’, The Accounting Review. Vol. 77 (2), pp. 237–264.
44. 44- Easton, P. and J. Pae (2004), ‘Accounting Conservatism and the Relation between Returns and Accounting Data’, Review of Accounting Studies, Vol. 9 (4), pp. 495–521.
45. 45- Beaver,W. and S. Ryan (2005), ‘Conditional and Unconditional Conservatism: Concepts and Modeling’, Review of Accounting Studies, Vol. 10, pp. 269–309.
46. 46- Etemadi, H.; Ahamadi D. H. (2010). Assessing the effective factors on accounting conservatism in companies based different measures for conservatism. MA dissertation in accounting, Tarbiat Modares University. [In Persian]
47. 47- Khodadadi, V.; Erfani, H.(2009). Investigation the relation between type of industry, market share, and capital compact with abnormal earnings persistence among companies listed in TSE. MA dissertation in accounting, Chamran University. [In Persian]
48. 48- Shah-Tahmasebi, S.; Khodadad-Hoseini, S. H., and Kordnaech, A. (2016). Designing the competitive advantages model based on organizational oriented and managerial oriented external social capital, with clarifying the roles of dynamic capabilities dimensions. Management Research in Iran, Vol. 20, No.1, pp. 81-102, 2016 [In Persian].
49. 49- Uones-Pour, Z. (2014). Assessing the industry dynamics with a comprehensive conceptual approach. The first National Conference on Emerging Trends in business management. [In Persian]
Send email to the article author
| Rights and permissions | |
 |
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License. |
