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Is Accounting Even Relevant?

Bedoui, Sami LU and Wilson Lövås, Alexander LU (2024) BUSN79 20241
Department 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:
author
Bedoui, Sami LU and Wilson Lövås, Alexander LU
supervisor
organization
course
BUSN79 20241
year
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}},
}