The value relevance of earnings in a transition economy: The case of Romania

Autor: Andrei Filip, Bernard Raffournier
Rok vydání: 2010
Předmět:
Zdroj: The International Journal of Accounting, Vol. 45, No 1 (2010) pp. 77-103
ISSN: 0020-7063
DOI: 10.1016/j.intacc.2010.01.004
Popis: We investigate the value relevance of earnings on the Bucharest Stock Exchange. We find that the association between accounting earnings and stock returns is comparable to the levels reported by studies conducted on more mature markets, and that it is higher for securities issued by small companies. Excluding losses from the analysis increases the value relevance of earnings, which confirms the transitory nature of negative earnings, already documented by prior studies. We also find that the regression coefficient of earnings changes is negative and we provide evidence consistent with the hypothesis that it is a consequence of the relative inefficiency of the market. Finally, the “prices lead earnings” hypothesis formulated for more mature markets is not supported by our results.
Databáze: OpenAIRE