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Essays on the market valuation implications of mandatory corporate reporting
Jönköping University, Jönköping International Business School, JIBS, Business Administration. Jönköping University, Jönköping International Business School, JIBS, Center for Family Enterprise and Ownership (CeFEO).
2016 (English)Doctoral thesis, comprehensive summary (Other academic)
Abstract [en]

The purpose of this dissertation is to enrich understanding on the market valuation implications of mandatory financial and non-financial reporting beyond and in relation to traditional accounting information. It is comprised of four individual essays each of which examines a different, and to some extent internationally unique, jurisdiction that can best serve the particular purpose of the essay as well as the overarching purpose of the dissertation.

The starting point of this empirical inquiry is the value relevance of purchased goodwill under IFRS and the moderating role that different levels of compliance with IFRS mandatory disclosures play on its market valuation. Similar to the first essay, the second essay focuses on traditional accounting information (specifically book value of equity and earnings) and examines potential differences on its market valuation before and after the mandatory introduction of an integrated reporting approach. The third essay focuses on mandatory carbon emissions reporting and compares its valuation relevance when such reporting is mandated by regulation vis-à-vis when it is voluntary. Finally, the fourth essay examines the market valuation interplay between mandatory financial and non-financial disclosures.

This dissertation intends to be of particular relevance first; to the accounting academic community which acknowledges that mandatory disclosures are not well understood and it calls for further research on how users of annual reports view mandatory disclosures and second; to accounting regulators. Empirical research on the value relevance of corporate reporting can provide useful insights into questions of interest to regulators because its research questions are often motivated by broader questions raised by these non-academic constituents. The dissertation in hand has similar motivations.

Place, publisher, year, edition, pages
Jönköping: Jönköping University, Jönköping International Business School , 2016. , p. 48
Series
JIBS Dissertation Series, ISSN 1403-0470 ; 109
National Category
Business Administration
Identifiers
URN: urn:nbn:se:hj:diva-31675ISBN: 978-91-86345-68-6 (print)OAI: oai:DiVA.org:hj-31675DiVA, id: diva2:958316
Public defence
2016-09-14, B1014, Jönköping International Business School, Jönköping, 13:00 (English)
Opponent
Supervisors
Available from: 2016-09-06 Created: 2016-09-06 Last updated: 2018-09-05Bibliographically approved
List of papers
1. Goodwill under IFRS: Relevance and disclosures in an unfavorable environment
Open this publication in new window or tab >>Goodwill under IFRS: Relevance and disclosures in an unfavorable environment
2014 (English)In: Accounting Forum, ISSN 0155-9982, E-ISSN 1467-6303, Vol. 38, no 1, p. 1-17Article in journal (Refereed) Published
Abstract [en]

The accounting treatment of purchased goodwill under IFRS has been severely criticizeddue to the extensive use of fair value accounting. The purpose of this study is to enrich theongoing debate upon this issue by drawing attention to the market valuation implications ofgoodwill in a country outside the Anglo-Saxon accounting paradigm, where the applicationof fair value accounting has been seen as more problematic. The results indicate that, in thecase of purchased goodwill, fair value accounting generates relevant accounting numbersbut only in companies that comply highly with IFRS disclosure requirements.

Place, publisher, year, edition, pages
Elsevier, 2014
Keywords
Goodwill, Value relevance, Fair value accounting, Mandatory disclosures, IFRS, Greece
National Category
Business Administration
Identifiers
urn:nbn:se:hj:diva-23445 (URN)10.1016/j.accfor.2013.11.001 (DOI)2-s2.0-84893763184 (Scopus ID)
Available from: 2014-02-12 Created: 2014-02-12 Last updated: 2018-09-05Bibliographically approved
2. Value relevance of accounting information under an integrated reporting approach: A research note
Open this publication in new window or tab >>Value relevance of accounting information under an integrated reporting approach: A research note
2016 (English)In: Journal of Accounting and Public Policy, ISSN 0278-4254, E-ISSN 1873-2070, Vol. 35, no 4, p. 437-452Article in journal (Refereed) Published
Abstract [en]

This research note aims to enrich our understanding regarding the market valuation implications of financial reporting under an Integrated Reporting (IR) approach. In order to do so, we focus on the Johannesburg Stock Exchange (JSE) and we examine whether the value relevance of summary accounting information (i.e., book value of equity and earnings) of firms listed on the JSE has enhanced after the mandatory adoption of an IR approach under the King III Report. Our study can be seen as a response to the recent calls for a closer investigation of the usefulness of the new reporting trend for investors. More specifically, our study can be seen as a response to the stance taken by the International Integrated Reporting Council (IIRC) Framework that the adoption of an IR approach improves the usefulness of financial reporting for investors. For our empirical tests we utilize a sample of 954. firm-year observations and employ a linear price-level model which associates a firm's market value of equity with its book value of equity and earnings. In line with the IIRC Framework's expectations, we find strong evidence of a sharp increase of the earnings' valuation coefficient. However, contrary to the Framework's stance, our results indicate a decline in the value relevance of net assets. Such a decline may be imputed to risks and/or unbooked liabilities that are revealed or measured more reliably after the introduction of an IR approach on the JSE. It should be noted, however, that despite its cause, the decline in the value relevance of net assets can be seen as a further argument in favor of the IIRC stance to assign equal importance to a wide range of "capitals," such as human, social and natural capital. We believe that our findings are of particular interest to a wide range of regulators, standards setters, practitioners, and academics but first and foremost to the JSE and IIRC.

National Category
Business Administration
Identifiers
urn:nbn:se:hj:diva-31672 (URN)10.1016/j.jaccpubpol.2016.04.004 (DOI)000381840100005 ()2-s2.0-84963976261 (Scopus ID)
Available from: 2016-09-06 Created: 2016-09-06 Last updated: 2017-11-21Bibliographically approved
3. Market valuation of greenhouse gas emissions under a mandatory reporting regime: evidence from the UK
Open this publication in new window or tab >>Market valuation of greenhouse gas emissions under a mandatory reporting regime: evidence from the UK
2017 (English)In: Accounting Forum, ISSN 0155-9982, E-ISSN 1467-6303, Vol. 41, no 3, p. 221-233Article in journal (Refereed) Published
Abstract [en]

This study provides evidence on the potential benefits of mandatory environmental reporting for listed firms market valuation. It takes advantage of recent regulation that requires all listed firms in the UK to report their annual greenhouse gas (GHG) emissions in their annual reports and shows that the magnitude of the negative association between GHG emissions and the market value of listed firms decreased after the introduction of the reporting regulation. This decline is attributed to regulation forestalling shareholders negative reflexive reaction towards firms carbon disclosures, as proposed by the theoretical work of Unerman and ODwyer (2007). 

Place, publisher, year, edition, pages
Elsevier, 2017
Keywords
Greenhouse gas emissions; Value relevance; London Stock Exchange; Mandatory disclosures; Reporting regulationa
National Category
Business Administration
Identifiers
urn:nbn:se:hj:diva-31673 (URN)10.1016/j.accfor.2017.02.003 (DOI)000415658000007 ()2-s2.0-85016478238 (Scopus ID)
Available from: 2016-09-06 Created: 2016-09-06 Last updated: 2018-09-05Bibliographically approved
4. The valuation relevance of environmental performance revisited: The moderating role of environmental provisions
Open this publication in new window or tab >>The valuation relevance of environmental performance revisited: The moderating role of environmental provisions
2018 (English)In: The British Accounting Review, ISSN 0890-8389, E-ISSN 1095-8347, Vol. 50, no 1, p. 32-47Article in journal (Refereed) Published
Abstract [en]

This study attempts to broaden our understanding of the value relevance of environmental performance by providing empirical evidence on the moderating role of financial environmental reporting. Previous studies find that firms' environmental performance can be both positively and negatively associated with market value. Such contradictory findings can be attributed to the fact that environmental performance is associated with future economic benefits and costs. This study suggests that firms with recognized environmental provisions on their balance sheets enable investors to disentangle these opposite effects either by signaling strong future financial performance or by enhancing the reliability of environmental performance information. Regardless of the mechanism by which this moderation effect is invoked, it is hypothesized that capital market participants place a positive and significantly higher value on the environmental performance ratings of firms with recognized environmental provisions than on the ratings of firms without environmental provisions. Utilizing a sample of 692 firm-year observations of French listed firms and employing a linear price-level model that associates the market value of a firm's equity with its environmental performance, I provide empirical evidence to corroborate this thesis. In addition to contributing to the academic debate on the market valuation implications of environmental performance, this study intends to provide useful insights from a country that can be considered a pioneer of environmental reporting legislation; hence, it provides valuable lessons for other jurisdictions that are in the process of developing their sustainability reporting regulations. Finally, the findings of this study support the calls for more integrated reporting showing that the interaction of financial and non-financial information has market valuation implications.

Place, publisher, year, edition, pages
Elsevier, 2018
Keywords
Environmental performance; Environmental provisions; Value relevance; France; Mandatory disclosures
National Category
Business Administration
Identifiers
urn:nbn:se:hj:diva-31674 (URN)10.1016/j.bar.2017.09.002 (DOI)000429517200003 ()2-s2.0-85033585152 (Scopus ID)
Available from: 2016-09-06 Created: 2016-09-06 Last updated: 2018-09-05Bibliographically approved

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