Value Relevance of Reported Earnings under Conservative Accounting Versus under Mark to Market Accounting
Keywords:
accounting methods, conservative accounting, market accounting, security market
Abstract
This paper compares the value relevance of earnings under two di#xFB00;erent account- ing 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 #xFB01;xated 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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Published
2013-05-15
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Copyright (c) 2013 Authors and Global Journals Private Limited
This work is licensed under a Creative Commons Attribution 4.0 International License.