This study examines the properties of the R-squared metric frequently used in accounting research as a measure of value relevance. Analytical results show that the metric is unreliable in the presence of scale effects. Specifically, we show that the metric is upwardly biased for accounting...

Three main approaches for examining the effect of accounting information in financial markets have emerged in the last three decades. We formally define information content, valuation relevance, and value relevance. Respectively, these approaches are based on Beaver (1968), Ball and Brown...

The work of Ohlson (1995) and Feltham and Ohlson (1995) had a profound impact on accounting research in the 1990's. In this paper, we first discuss this valuation framework, identify its key features, and put it in the context of prior valuation models. We then review the numerous empirical...