This paper offers a view of the relevance of value relevance research for financial accounting standard setting that contrasts with the view offered in Holthausen and Watts (2001) (hereafter HW). A key conclusion of HW is that value relevance research offers little or no insight for standard...

We find, as predicted, that the differential ability of accrual and cash flow components of earnings to help forecast future abnormal earnings and the persistence of the components results in the components having different valuation implications. We base our tests on Ohlson (1999) applied to...

This study examines the relation between fair value disclosures under Statement of Financial Accounting Standards No. 107 (SFAS 107) and bank share prices. Our goal is to determine whether fair value disclosures explain cross-sectional variation in bank common share prices beyond that provided...

Many of the Financial Accounting Standards Board's current agenda items relate to measuring financial instruments' fair values, many of which have option-like characteristics. This study presents evidence on the potential practical applicability of using option pricing theory to account for one...

This study tests hypotheses about effects of the abandonment option on equity book value and net income valuation characteristics. As predicted, pricing multiples on and explanatory power of book equity (net income) increase (decrease) as firms approach liquidation or bankruptcy. Also, pricing...

This study provides evidence that fair value estimates of loans, securities and long-term debt disclosed under SFAS No. 107 provide significant explanatory power for bank share prices beyond that provided by related book values. In contrast to Eccher et al. (1996) and Nelson (1996), we...

We find that the adjustments to net income resulting from mandatory 2005 adoption of IFRS in Europe are relevant to investors in financial as well as non-financial firms. However, we find differences in value relevance of the aggregate net income adjustment and adjustments relating to several...