Value relevance of financial assets

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The value relevance of investment property fair value

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

Pensions accounting and value relevance

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

The value relevance of tangible fixed assets

A Work Project, presented as part of the requirements for the Award of a Masters Degree in Finance from the NOVA – School of Business and Economics

Comprehensive income: evidence from Portuguese listed companies on reporting choices and value relevance

This work project aims at analysing choices related to Comprehensive income (CI) of Portuguese listed firms and understanding the reasons behind them. Additionally, it studies the relevance of CI versus Net Income (NI). It was found that firm’s size and volume of Other comprehensive income (OCI) are positively related with the choice for separate statements while smaller firms with positive NI and negative OCI tend to disclose less information about taxes. The value relevance of CI proved to be superior to that of NI but OCI seems to have no incremental value relevance.

El valor razonable como concepto vinculado a la pertinencia del valor. Fair value as a concept related to value relevance.

IDENTIFICACIÓN Y CARACTERIZACIÓN DEL PROBLEMA - HIPÓTESIS Según la NIC 39, el valor razonable es la cantidad por la que puede ser intercambiado un activo o cancelado un pasivo entre un comprador y un vendedor interesados y debidamente informados, en condiciones de independencia mutua. La definición del FASB (SFAC 7) es muy similar, y define el valor razonable como el monto mediante el que un activo podría ser enajenado en una transacción entre partes independientes, dispuestas a realizar la operación en situaciones diferentes a la de una liquidación o a la de una venta forzada. Puede apreciarse que esta definición de valor razonable es limitada porque, a excepción de escenarios que se correspondan con mercados perfectos y completos, el concepto puede abarcar valores de entrada, valores de salida y valores en uso, los cuales pueden ser muy diferentes (Beaver, 1987). El valor de entrada es el valor de adquisición o de reemplazo, el valor de salida es el precio al cual un activo puede ser vendido o liquidado, y el valor en uso es el valor incremental de una empresa atribuible a un activo (se correspondería con el valor presente mencionado anteriormente). Dado que el IASB y la FASB se ocupan de la valuación de activos que una empresa posee, y no de activos que serán adquiridos en un futuro, su definición de valor razonable debería ser interpretada desde la perspectiva del vendedor. Por lo tanto, el concepto de valor razonable que manejan el IASB y la FASB se asemeja a un valor de salida, tal como lo propusieron Chambers y Stirling hace bastantes años atrás.Planteado esto, lo que tratará de dilucidar este proyecto de investigación es si este concepto de valor razonable es realmente novedoso o es una simple regresión a los valores corrientes de salida defendidos por los autores de la década del setenta. OBJETIVOS GENERALES Y ESPECÍFICOS General Analizar si el concepto “valor razonable” tal como es definido por la normativa actual se corresponde con una definición novedosa o es una adaptación/modificación/regresión de conceptos ya existentes (valores corrientes de salida). Específicos Revisar la literatura específica desde el punto de vista de la teoría contable y las normas de las que dispone la profesión referidas a los siguientes aspectos: a) Valores corrientes b) Valor razonable MATERIALES Y MÉTODOS El análisis que se llevará a cabo comprenderá dos aspectos. El primero consiste en la revisión de la doctrina contable. Para ello se analizará bibliografía significativa y trabajos de eventos académicos relacionados con el valor razonable. En segundo término se revisará la normativa profesional a nivel nacional e internacional. Después de concluido con los pasos anteriores se analizará la novedad del concepto valor razonable y su semejanza con el valor corriente de salida planteado por los autores de la década del setenta. IMPORTANCIA DEL PROYECTO – IMPACTO Se pretende revisar si el concepto valor razonable planteado por la normativa actual resulta realmente novedoso o es una adaptación de viejos conceptos planteados en la década del setenta del siglo pasado. El proyecto resulta importante porque es un tema no desarrollado en la literatura, ni planteado en congresos. Se estima lograr material de publicación y presentación en eventos académicos. According to the NIC 39, fair value is the quantity for the one that can be exchanged an asset or cancelled a liability between a buyer and a seller interested and due informed, in conditions of mutual independence. The definition of the FASB (SFAC 7) is very similar, and defines fair value as the amount by means of which an assets might be alienated in a transaction between independent parts, ready to realize the operation in situations different from that of a liquidation or to that of a forced sale. This definition of reasonable value is limited because, with the exception of scenes that fit with perfect and complete markets, the concept can include values of entry, values of exit and values in use, which can be very different (Beaver, 1987). The value of entry is the value of acquisition or of replacement, the value of exit is the price to which an asset can be sold or liquidated, and the value in use is the incremental value of a company attributable to an asset. Provided that the IASB and the FASB deal with the appraisal of assets that a company possesses, and not of assets that will be acquired in a future, this definition of fair value should be interpreted from the perspective of the seller. Therefore, the concept of reasonable value that they handle the IASB and the FASB is alike a value of exit, as Chambers and Stirling proposed it enough years ago behind. We will review if the concept of "fair value" is really new or if it is an adaptation of old concepts.

The impact of learning outcomes in business education: assessing value, relevance and graduate ability in a multi-country study of employers and business graduates

This paper discusses critical findings from a two-year EU-funded research project involving four European countries: Austria, England, Slovenia and Romania. The project had two primary aims. The first of these was to develop a systematic procedure for assessing the balance between learning outcomes acquired in education and the specific needs of the labour market. The second aim was to develop and test a set of meta-level quality indicators aimed at evaluating the linkages between education and employment. The project was distinctive in that it combined different partners from Higher Education, Vocational Training, Industry and Quality Assurance. One of the key emergent themes identified in exploratory interviews was that employers and recent business graduates in all four countries want a well-rounded education which delivers a broad foundation of key business knowledge across the various disciplines. Both groups also identified the need for personal development in critical skills and competencies. Following the exploratory study, a questionnaire was designed to address five functional business areas, as well as a cluster of 8 business competencies. Within the survey, questions relating to the meta-level quality indicators assessed the impact of these learning outcomes on the workplace, in terms of the following: 1) value, 2) relevance and 3) graduate ability. This paper provides an overview of the study findings from a sample of 900 business graduates and employers. Two theoretical models are proposed as tools for predicting satisfaction with work performance and satisfaction with business education. The implications of the study findings for education, employment and European public policy are discussed.

Assessing the value relevance of accounting data after the introduction of IFRS in Europe

Since 2005, European-listed companies have been required to prepare their consolidated financial statements in accordance with the International Financial Reporting Standards (IFRS). We examine whether value relevance increased following the introduction of IFRS, using a sample of 3,721 companies listed on five European stock exchanges: Frankfurt, Madrid, Paris, London, and Milan. We find mixed evidence of an increase in value relevance. However, the influence of earnings on share price increased following the introduction of IFRS in Germany, France, and the United Kingdom, while the influence of book value of equity decreased (except for the United Kingdom). © 2010 Blackwell Publishing Ltd.

The quality of financial information in the extractive industries: a value relevance analysis

The extractive industry is characterized by high levels of risk and uncertainty. These attributes create challenges when applying traditional accounting concepts (such as the revenue recognition and matching concepts) to the preparation of financial statements in the industry. The International Accounting Standards Board (2010) states that the objective of general purpose financial statements is to provide useful financial information to assist the capital allocation decisions of existing and potential providers of capital. The usefulness of information is defined as being relevant and faithfully represented so as to best aid in the investment decisions of capital providers. Value relevance research utilizes adaptations of the Ohlson (1995) to assess the attribute of value relevance which is one part of the attributes resulting in useful information. This study firstly examines the value relevance of the financial information disclosed in the financial reports of extractive firms. The findings reveal that the value relevance of information disclosed in the financial reports depends on the circumstances of the firm including sector, size and profitability. Traditional accounting concepts such as the matching concept can be ineffective when applied to small firms who are primarily engaged in nonproduction activities that involve significant levels of uncertainty such as exploration activities or the development of sites. Standard setting bodies such as the International Accounting Standards Board and the Financial Accounting Standards Board have addressed the financial reporting challenges in the extractive industry by allowing a significant amount of accounting flexibility in industryspecific accounting standards, particularly in relation to the accounting treatment of exploration and evaluation expenditure. Therefore, secondly this study examines whether the choice of exploration accounting policy has an effect on the value relevance of information disclosed in the financial reports. The findings show that, in general, the Successful Efforts method produces value relevant information in the financial reports of profitable extractive firms. However, specifically in the oil & gas sector, the Full Cost method produces value relevant asset disclosures if the firm is lossmaking. This indicates that investors in production and non-production orientated firms have different information needs and these needs cannot be simultaneously fulfilled by a single accounting policy. In the mining sector, a preference by large profitable mining companies towards a more conservative policy than either the Full Cost or Successful Efforts methods does not result in more value relevant information being disclosed in the financial reports. This finding supports the fact that the qualitative characteristic of prudence is a form of bias which has a downward effect on asset values. The third aspect of this study is an examination of the effect of corporate governance on the value relevance of disclosures made in the financial reports of extractive firms. The findings show that the key factor influencing the value relevance of financial information is the ability of the directors to select accounting policies which reflect the economic substance of the particular circumstances facing the firms in an effective way. Corporate governance is found to have an effect on value relevance, particularly in the oil & gas sector. However, there is no significant difference between the exploration accounting policy choices made by directors of firms with good systems of corporate governance and those with weak systems of corporate governance.

Acordo de Acionistas e qualidade dos lucros contábeis : Evidências empíricas no Mercado Brasileiro

O trabalho teve por objetivo verificar a influência da presença dos acordos de acionistas na qualidade das informações contábeis divulgadas pelas empresas listadas na BM&FBOVESPA, do ano de 2001 a 2011. Para inferir a respeito da qualidade das informações contábeis foram utilizadas as métricas de informatividade e value relevance. Foram analisados em separado: os acordos de comando (utilizados para garantir o controle) dos acordos de defesa (utilizados para garantir o acesso a determinados direitos através do alcance de um percentual mínimo de capital votante). A amostra teve como critério de corte o mínimo de 0,001 de liquidez na BM&FBOVESPA. Foi utilizada regressão linear múltipla com dados em painel desequilibrado, tendo como variáveis de controle: concentração de votos, tamanho, endividamento, market-to-book e perdas. Com base nos efeitos cumprimento e monitoramento, com a utilização da metodologia proposta, o trabalho aponta que empresas com qualquer um dos tipos de acordo entre acionistas possuem maior qualidade das informações contábeis divulgadas.