PhD defence: the Value Relevance of Accounting Information

PhD Defense

10 March 2009 19:55

(updated: 23 May 2016 19:56)

PhD defence: the Value Relevance of Accounting Information

On Friday 13th March Leif Atle Beisland will hold a trial lecture on a prescribed topic, and will then defend his doctoral thesis as a final requirement of the PhD programme at NHH. The title of Beisland's dissertation is "Essays on the Value Relevance of Accounting Information".

The dissertation consists of five independent essays on the value relevance of accounting information. Value relevance is defined as the ability of financial statement information to capture and summarise firm value. Value relevance is measured as the statistical association between financial statement information and stock market values or returns.

The first essay of the dissertation is a thorough description of recent value relevance research. The remaining four essays are all empirical studies, conducted on Norwegian and Swedish samples. The first study concludes that if accounting earnings are a significant predictor of short term firm performance, it is reasonable to expect that they are also value relevant. However, this prediction may not be reversed.

The second study finds that accounting information on average is equally value-relevant in traditional, mostly manufacturing, industries, and non-traditional, typically high-tech, industries when the higher frequency of transitory earnings in the non-traditional industries is taken into account. Still, the value relevance is significantly more unstable in non-traditional industries than in traditional ones. Specifically, the accounting information in non-traditional industries has particularly low information content, relatively speaking, to stock investors when the economy is doing well.

The third study presents evidence that the value relevance of earnings increases dramatically if earnings are disaggregated and the sign of earnings is taken into account in the empirical analysis.

The fourth and final empirical study concludes that the stock price's association with book equity has increased after Norwegian exchange listed companies switched accounting regime to International Financial Reporting Standards (IFRS). However, the stock price's response to earnings has actually gone down.

Prescribed topic for the trial lecture: "Negative earnings and value relevance"

Date, time and place of the trial lecture: Friday March 13, 10:15 - 11:00 in Karl Borch Auditorium

Title of the dissertation: "Essays on the Value Relevance of Accounting Information"

Date, time and place for the defence: Friday March 13, 12:15 in Karl Borch Auditorium