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Stale and scale effects in markets-based accounting research: evidence from the valuation of dividends

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Stale and scale effects in markets-based accounting research : evidence from the valuation of dividends. / Goncharov, Igor; Veenman, David.

In: European Accounting Review, Vol. 23, No. 1, 2014, p. 25-55.

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Goncharov, Igor ; Veenman, David. / Stale and scale effects in markets-based accounting research : evidence from the valuation of dividends. In: European Accounting Review. 2014 ; Vol. 23, No. 1. pp. 25-55.

Bibtex

@article{9871bc987d2344ed81653c9f854a6099,
title = "Stale and scale effects in markets-based accounting research: evidence from the valuation of dividends",
abstract = "This study revisits prior research on the valuation of dividends in an accounting-based valuation framework. Using a battery of tests, we show that market value deflation is essential in market-based tests of dividend displacement and signalling because it controls for 'stale' information in addition to scale (size) differences across firms. For US firms, we show that after controlling for 'stale' information, the empirical association between dividends and market values switches from positive to negative. This switch is not explained by scale differences across firms. Further, we show that after controlling for staleness, the valuation of dividends remains positive for European firms. This result is explained by the relatively stronger association of dividends with future earnings in these settings (i.e. signalling). Lastly, our country-specific estimates of dividend valuation provide a potentially valuable index for studies aimed at examining the effects of accounting and securities regulation on information asymmetries in an international context.",
keywords = "M41, G12, C10, G14, RESIDUAL INCOME VALUATION, MANDATORY IFRS ADOPTION, VALUE-RELEVANCE, EQUITY VALUATION, INTANGIBLE ASSETS, EMPIRICAL-ANALYSIS, EUROPEAN-UNION, CASH HOLDINGS, STOCK-PRICES, SHARE PRICES",
author = "Igor Goncharov and David Veenman",
year = "2014",
doi = "10.1080/09638180.2013.795870",
language = "English",
volume = "23",
pages = "25--55",
journal = "European Accounting Review",
issn = "0963-8180",
publisher = "Routledge",
number = "1",

}

RIS

TY - JOUR

T1 - Stale and scale effects in markets-based accounting research

T2 - evidence from the valuation of dividends

AU - Goncharov, Igor

AU - Veenman, David

PY - 2014

Y1 - 2014

N2 - This study revisits prior research on the valuation of dividends in an accounting-based valuation framework. Using a battery of tests, we show that market value deflation is essential in market-based tests of dividend displacement and signalling because it controls for 'stale' information in addition to scale (size) differences across firms. For US firms, we show that after controlling for 'stale' information, the empirical association between dividends and market values switches from positive to negative. This switch is not explained by scale differences across firms. Further, we show that after controlling for staleness, the valuation of dividends remains positive for European firms. This result is explained by the relatively stronger association of dividends with future earnings in these settings (i.e. signalling). Lastly, our country-specific estimates of dividend valuation provide a potentially valuable index for studies aimed at examining the effects of accounting and securities regulation on information asymmetries in an international context.

AB - This study revisits prior research on the valuation of dividends in an accounting-based valuation framework. Using a battery of tests, we show that market value deflation is essential in market-based tests of dividend displacement and signalling because it controls for 'stale' information in addition to scale (size) differences across firms. For US firms, we show that after controlling for 'stale' information, the empirical association between dividends and market values switches from positive to negative. This switch is not explained by scale differences across firms. Further, we show that after controlling for staleness, the valuation of dividends remains positive for European firms. This result is explained by the relatively stronger association of dividends with future earnings in these settings (i.e. signalling). Lastly, our country-specific estimates of dividend valuation provide a potentially valuable index for studies aimed at examining the effects of accounting and securities regulation on information asymmetries in an international context.

KW - M41

KW - G12

KW - C10

KW - G14

KW - RESIDUAL INCOME VALUATION

KW - MANDATORY IFRS ADOPTION

KW - VALUE-RELEVANCE

KW - EQUITY VALUATION

KW - INTANGIBLE ASSETS

KW - EMPIRICAL-ANALYSIS

KW - EUROPEAN-UNION

KW - CASH HOLDINGS

KW - STOCK-PRICES

KW - SHARE PRICES

U2 - 10.1080/09638180.2013.795870

DO - 10.1080/09638180.2013.795870

M3 - Journal article

VL - 23

SP - 25

EP - 55

JO - European Accounting Review

JF - European Accounting Review

SN - 0963-8180

IS - 1

ER -