Is Accounting Even Relevant?
(2024) BUSN79 20241Department of Business Administration
- Abstract
- This thesis investigates the value relevance of accounting metrics in the Nordic stock markets from 2018 to 2022, applying and extending the Ohlson equity valuation model. Given the increasing importance of intangible assets in modern economies, we also explore how traditional accounting metrics explain stock prices, particularly for companies with high intangible asset ratios. Using a deductive research approach, we formulated hypotheses based on existing value relevance theories and empirical literature, subsequently testing these hypotheses using a multiregression analysis on panel data.
The findings lead us to determine the explanatory power of the Ohlson model (R² of 45,9%) as well as the revised Ohlson model including cash flow... (More) - This thesis investigates the value relevance of accounting metrics in the Nordic stock markets from 2018 to 2022, applying and extending the Ohlson equity valuation model. Given the increasing importance of intangible assets in modern economies, we also explore how traditional accounting metrics explain stock prices, particularly for companies with high intangible asset ratios. Using a deductive research approach, we formulated hypotheses based on existing value relevance theories and empirical literature, subsequently testing these hypotheses using a multiregression analysis on panel data.
The findings lead us to determine the explanatory power of the Ohlson model (R² of 45,9%) as well as the revised Ohlson model including cash flow (R² of 52,9%), commonly used in value relevance research. Furthermore, our findings indicate that (1st) earnings per share and (2nd) book value per share are significant predictors of market value in the Nordic context, though their explanatory power diminishes for intangible-intensive firms. The study contributes to financial reporting standards by highlighting the limitations of conventional accounting metrics in capturing the market value of such firms. (Less)
Please use this url to cite or link to this publication:
http://lup.lub.lu.se/student-papers/record/9167330
- author
- Bedoui, Sami LU and Wilson Lövås, Alexander LU
- supervisor
- organization
- course
- BUSN79 20241
- year
- 2024
- type
- H1 - Master's Degree (One Year)
- subject
- keywords
- Value Relevance, Equity Valuation, Accounting Information, Financial Statements, Intangible Assets
- language
- English
- id
- 9167330
- date added to LUP
- 2024-08-07 15:42:08
- date last changed
- 2024-08-07 15:42:08
@misc{9167330, abstract = {{This thesis investigates the value relevance of accounting metrics in the Nordic stock markets from 2018 to 2022, applying and extending the Ohlson equity valuation model. Given the increasing importance of intangible assets in modern economies, we also explore how traditional accounting metrics explain stock prices, particularly for companies with high intangible asset ratios. Using a deductive research approach, we formulated hypotheses based on existing value relevance theories and empirical literature, subsequently testing these hypotheses using a multiregression analysis on panel data. The findings lead us to determine the explanatory power of the Ohlson model (R² of 45,9%) as well as the revised Ohlson model including cash flow (R² of 52,9%), commonly used in value relevance research. Furthermore, our findings indicate that (1st) earnings per share and (2nd) book value per share are significant predictors of market value in the Nordic context, though their explanatory power diminishes for intangible-intensive firms. The study contributes to financial reporting standards by highlighting the limitations of conventional accounting metrics in capturing the market value of such firms.}}, author = {{Bedoui, Sami and Wilson Lövås, Alexander}}, language = {{eng}}, note = {{Student Paper}}, title = {{Is Accounting Even Relevant?}}, year = {{2024}}, }