Value Relevance of Reported Earnings under Conservative Accounting Versus under Mark to Market Accounting

Guo Ying Luo

Authors

Guo Ying Luo

Keywords:

accounting methods, conservative accounting, market accounting, security market

Abstract

This paper compares the value relevance of earnings under two different accounting methods (namely, conservative accounting and mark to market accounting) in a competitive security market. It proves that the reported earnings are value relevant under both types of accounting methods. Furthermore, if the proportion of earnings fixated traders lies in the upper range of the interval [0,1], the reported earnings under conservative accounting are more value relevant than the ones under mark to market. Otherwise, the reported earnings under mark to market are more value relevant than the ones under conservative accounting.

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How to Cite

Value Relevance of Reported Earnings under Conservative Accounting Versus under Mark to Market Accounting. (2013). Global Journal of Management and Business Research, 13(D4), 23-27. https://journalofbusiness.org/index.php/GJMBR/article/view/1034

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