The relevance of the value-relevance literature for financial accounting standard setting

“(Holthausen & R. Watts, 2001) defines discretionary accruals as the opportunistic behavior of leaders to mislead the use of accounting information for appropriate personal gain or for business needs.”

“…que procuram medir a capacidade das demonstrações financeiras de explicar o valor da empresa, analisando como os lucros contábeis impactam os retornos, sendo o modelo empírico desenvolvido por Ohlson (1995) amplamente utilizado nesse tipo de pesquisa (Holthausen & Watts, 2001; Barth et al ., 2001).”

“The value relevance considered in this article is measured by incremental association, as proposed by Holthausen and Watts (2001), which seeks to identify whether the pandemic or TVAD is statistically associated with the share price.”

“Changes in recognition rules, specifically recognizing fair values in financial statements, can lower the reliability of accounting information because firms can employ their discretion in measuring fair value (Holthausen and Watts, 2001).”

“A further underlying feature of studies in this domain is that they place an emphasis on the existence of efficient markets – assuming that market figures represented by share values are not only unbiased but error-free (Holthausen and Watts, 2001).”

“Mais especificamente no que diz respeito aos estudos de Associação Relativa (Holthausen & Watts, 2001) – que compara o value relevance antes e após a adoção de novos padrõs contábeis – faz-se necessário contextualizar que a inserção de padrões contábeis internacionais teve, como intuito, promover…”

“Meanwhile, Shan (2015) found that the abnormal related party transactions reduce the level of value relevance in which value relevance is the ability to generate valuable financial information that would affect stock price and stock return (Barth et al., 2001; Holthausen and Watts, 2001).”

“Holthausen and Watts [12] also provided evidence that the absence of investor protection would likely lead to a reduction in the perceived quality of the financial statement and investor response to the earnings announcement.”

“of value relevance according to sampled authors: 1) value relevance examines the association between accounting figures and firm’s equity value [52]; 2) another study analyses value relevance in the following two ways: firstly, that stock prices are influenced by figures in the financial statements since they are used…”

“Holthausen and Watts (2001) and Watts (2003a) argue that conservatism persists because it also helps to address agency problems.”

“18 litigation (Basu, 1997; Holthausen and Watts, 2001) and the passage of Sarbanes-Oxley Act.”

“Accounting information is important in reducing agency costs that arise in the debt contracting process (Ahmed et al. 2002; Ball 2001; Holthausen and Watts 2001; Leftwich 1983; Li 2010; Watts and Zimmerman 1986).”

“Thus, the book value of equity serves as a proxy for the value of the abandonment or liquidation option in this scenario (Berger et al., 1996; Barth et al., 1998; Holthausen & Watts, 2001; Ashton et al., 2003).”

“However, as noted by Holthausen and Watts (2001), coefficients will only be exactly one in the absence of any measurement error.”

“The use of the linear regression analysis does not show the non-linear earnings and stock price volatility (Holthausen and Watts, 2001). Meanwhile, the use of the R(2) value to a certain degree, would cause an increase due to the sampling error found in the sample size and the number of predictors in the regression mo…”

“We follow Barth et al. (2008) in measuring earnings quality, and use following four factors.”

“Holthausen and Watts (2001) posited that the larger the adjusted R2, the greater the value relevance of the independent variables.”

“Accounting number is typically deemed to be value relevant if its estimated regression coefficient is significantly different from zero (Holthausen and Watts, 2001).”

“Conservative accounting firms usually understate net assets by recognizing losses in a timely manner than gains (Basu, 1997; Holthausen and Watts, 2001).”

“…primary financial statements argue that fair values do not meet information needs relative to the stewardship objective of financial reporting, and maintain that amortized-cost-based financial statements are necessary to assess stewardship (e.g., Holthausen & Watts, 2001; Nissim & Penman, 2008).”

“…at a very early stage, and that the source of finance is particularly important for investments in the creation of knowledge because of high firm specific investment costs and low collateral value (Williamson, 1988; Shleifer and Vishny, 1992; Holthausen and Watts, 2001; Arrow, 1962; Nelson, 1959).”

“The relative approach relates comparison of measures providing better information as compared to others as suggested by Holthausen (2000).”

“Holthausen and Watts (2001) and Aboody and Lev (1998) show that managers, at the capitalization of certain intangibles, skew the amounts recognized for contractual reasons such that contract terms on the debt.”

“The analysis is motivated by discussion within prior research (e.g., Holthausen and Watts 2001; Riedl 2004) that suggests potential benefits to considering the effects of accounting standards on the quality of reported financial information.”

“Hong and Stein (1999) set forth a model in which private information slowly diffuses across the population.”

“Watts (2003) and Holthausen and Watts (2001) argue for the important role of conservatism in addressing agency problems.”

“The fair value of goodwill estimated under SFAS 142 is not based directly on actively traded market prices, raising the concern that it is susceptible to managerial opportunism (Holthausen and Watts 2001; Watts 2003).”

“Building on this nexus of the contracts view of the firm, studies such as Watts (1977, 2003a, 2003b), Watts and Zimmerman (1986), Ball (2001), Holthausen and Watts (2001) and Ball and Shivakumar (2005) emphasize the role of ATLR in alleviating agency conflicts.”

“Studies have shown that accounting practice has become more conservatism in recent years (Basu 1997, Ball, Kothari and Robin, 2000; Holthausen and Watts, 2001).”

“Even the objectives of mandated financial reporting are under dispute (Barth et al. 2001; Holthausen and Watts 2001; Kothari et al. 2010).”

“variables to standard-setters (see Brown et al. 1999; Holthausen and Watts 2001 ).”

“Embora os coeficientes significativos indiquem a relevância das variáveis de interesse conforme a abordagem incremental da relevância informacional (Holthausen & Watts, 2001), a magnitude desses coeficientes indica a menor ou a maior relevância dessas variáveis.”

“Barth et al. (2015) also discovered that the relevance of financial statements depends on the value of information disclosure of intellectual property, brand equity as well as goodwill in a clear and consistent way and the impact of transparency on the pricing of stocks in the stock market is a…”

“…are included (e.g., this study examines the relationship between ESG and stock prices); (iii) information content studies, which examine whether disclosure of a particular accounting number significantly increases investor knowledge (typically using event studies) (Holthausen & Watts, 2001).”

“The demand for dirty surplus accounting is driven by the diverse information needs of different fi nancial statement users (Holthausen & Watts, 2001).”

“When accounting information plays this role, it shows a meaningful association with stock prices, suggesting that financial statements provide decision-useful information for investors (Barth et al., 2001; Holthausen & Watts, 2001).”

“Consistent with the literature (Holthausen and Watts 2001; Ohlson 1995), we document a significantly positive relationship between earnings ( EPS ) and stock price.”

“This is assessed through interviews with the finance department of Tirta Binangun Company, focusing on indicators such as accuracy, relevance, reliability, comprehensiveness, and interpretability (Mary E. Barth, 2021).”

“The hypothesis that the amounts reflected in stock prices are the "true" variables is stronger than the market efficiency hypothesis: market estimates are not only unbiased but also error-free (Holthausen & Watts, 2001).”

“Accounting conservatism, especially conditional conservatism, is recognized as an essential characteristic of accounting practice (Ball 2001; Basu 1997; Holthausen and Watts 2001; Sterling 1967; Watts 2003a, 2003b).”

“And one of the most paid attention to accounting information in financial statements is profit (Holthausen & Watts, 2001).”

“Há uma literatura crescente que analisa os efeitos dos relatórios de sustentabilidade sobre os retornos das ações e a liquidez do mercado (Holthausen & Watts, 2001; Flammer, 2013; Christensen et al., 2017; Albuquerque et al., 2020; Christensen et al., 2021).”