Get 20M+ Full-Text Papers For Less Than $1.50/day. Start a 14-Day Trial for You or Your Team.

Learn More →

Value relevance of earnings and book values in the Qatari Stock Exchange

Value relevance of earnings and book values in the Qatari Stock Exchange The study of developed capital markets suggests that information provided in financial statements has lost its value relevance to equity holders. The purpose of this paper is to explore this issue in the emerging market of Qatar.Design/methodology/approachFollowing other studies in the literature, the study examines the value relevance of earnings and book values using the price valuation model provided by Ohlson (1995). A total of 215 observations were collected from all firms listed on the Qatari Stock Exchange over a period of five years (2012–2016).FindingsThis study suggests that the value relevance of both earnings and book values has noticeably decreased over the sample period. However, its results show that the decline in the value relevance of earnings favored book values.Research limitations/implicationsLike other studies, this one has limitations that suggest areas for future research. For example, in Qatar, like other emerging markets, a lack of data prevents the performance of deep analysis. Additionally, the authors only use Ohlson’s (1995) model as a framework for evaluation. It would be interesting to explore the changes when examining alternative valuation models. Another limitation is that the authors examine only two accounting measures: earnings and book values. Further research could explore changes in the value relevance of other measures, such as cash flow.Practical implicationsThese findings provide empirical evidence regarding the value relevance of earnings and book values in an emerging market.Originality/valueTo the authors’ knowledge, this paper provides the first empirical evidence regarding the value relevance of earnings and book values in the emerging capital market of Qatar. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png EuroMed Journal of Business Emerald Publishing

Value relevance of earnings and book values in the Qatari Stock Exchange

Download PDF
14 pages

Loading next page...
 
/lp/emerald-publishing/value-relevance-of-earnings-and-book-values-in-the-qatari-stock-MwmTdVWrl6
Publisher
Emerald Publishing
Copyright
© Emerald Publishing Limited
ISSN
1450-2194
DOI
10.1108/emjb-02-2018-0009
Publisher site
See Article on Publisher Site

Abstract

The study of developed capital markets suggests that information provided in financial statements has lost its value relevance to equity holders. The purpose of this paper is to explore this issue in the emerging market of Qatar.Design/methodology/approachFollowing other studies in the literature, the study examines the value relevance of earnings and book values using the price valuation model provided by Ohlson (1995). A total of 215 observations were collected from all firms listed on the Qatari Stock Exchange over a period of five years (2012–2016).FindingsThis study suggests that the value relevance of both earnings and book values has noticeably decreased over the sample period. However, its results show that the decline in the value relevance of earnings favored book values.Research limitations/implicationsLike other studies, this one has limitations that suggest areas for future research. For example, in Qatar, like other emerging markets, a lack of data prevents the performance of deep analysis. Additionally, the authors only use Ohlson’s (1995) model as a framework for evaluation. It would be interesting to explore the changes when examining alternative valuation models. Another limitation is that the authors examine only two accounting measures: earnings and book values. Further research could explore changes in the value relevance of other measures, such as cash flow.Practical implicationsThese findings provide empirical evidence regarding the value relevance of earnings and book values in an emerging market.Originality/valueTo the authors’ knowledge, this paper provides the first empirical evidence regarding the value relevance of earnings and book values in the emerging capital market of Qatar.

Journal

EuroMed Journal of Business – Emerald Publishing

Published: Mar 20, 2019

Keywords: Qatar; Financial statements; Value relevance; Emerging capital markets; Ohlson’s model

References

  • Corporate governance practices, ownership structure, and corporate performance in the GCC countries
    Abdallah, A.; Ismail, A.
  • Corporate governance and provisions under IAS 37
    Acar, E.; Ozkan, S.
  • The accounting value relevance of earning and book values: Tunisian banks and financial institutions
    Ahmadi, A.; Bouri, A.
  • The influence of institutional and government ownership on firm performance: evidence from Kuwait
    Alfaraih, M.; Alanezi, F.; Almujamed, H.
  • Have financial statements lost their relevance? Empirical evidence from the frontier market of Kuwait
    Alfraih, M.
  • The value relevance of intellectual capital disclosure: empirical evidence from Kuwait
    Alfraih, M.
  • Predictable returns in an emerging stock market: evidence from Qatar
    Almujamed, H.
  • An empirical evaluation of accounting income numbers
    Ball, R.; Brown, P.
  • The market valuation implications of net periodic pension cost components
    Barth, M.; Beaver, W.; Landsman, W.
  • The relevance of the value relevance literature for financial accounting standard setting: another view
    Barth, M.; Beaver, W.; Landsman, W.
  • Valuation-based accounting research: implications for financial reporting and opportunities for future research
    Barth, M.E.
  • Relative valuation roles of equity book value and net income as a function of financial health
    Barth, M.E.; Beaver, W.H.; Landsman, W.R.
  • The information content of annual earnings announcements
    Beaver, W.H.
  • Perspectives on recent capital market research
    Beaver, W.H.
  • Value relevance of earnings and cash flows during the global financial crisis
    Bepari, M.K.; Rahman, S.F.; Mollik, A.T.
  • On the intertemporal value relevance of conventional financial accounting in Australia
    Brimble, M.; Hodgson, A.
  • Use of R2 in accounting research: measuring changes in value relevance over the last four decades
    Brown, S.; Kin, L.; Lys, T.
  • Value relevance of accounting information in China pre- and post-2001 accounting reforms
    Chalmers, K.; Navissi, F.; Qu, W.
  • Relative value-relevance of accounting measures based on Chinese accounting standards and International Financial Reporting Standards
    Chamisa, E.; Mangena, M.; Ye, G.
  • Changes in the value-relevance of earnings and book values over the past forty years
    Collins, D.W.; Maydew, E.L.; Weiss, I.S.
  • Equity valuation and negative earnings: the role of book value of equity
    Collins, D.W.; Pincus, M.; Xie, H.
  • Assessing the value relevance of accounting data after the introduction of IFRS in Europe
    Devalle, A.; Onali, E.; Magarini, R.
  • The declining value-relevance of accounting information and non-information-based trading: an empirical analysis
    Dontoh, A.; Radhakrishnan, S.; Ronen, J.
  • Is stock price a good measure for assessing value-relevance of earnings? An empirical test
    Dontoh, A.; Radhakrishnan, S.; Ronen, J.
  • Earnings as an explanatory variable for returns
    Easton, P.; Harris, T.
  • Have financial statements lost their relevance?
    Francis, J.; Schipper, K.
  • Do users in Qatar perceive intellectual capital information to be value relevant for decision-making purposes?
    Ghaida, R.; Ousama, A.; Hammami, H.; Shreim, O.
  • The changing relevance of accounting numbers to debt holders over time
    Givoly, D.; Hayn, C.; Katz, S.P.
  • Value relevance of alternative accounting performance measures: Australian evidence
    Habib, A.
  • A test of the extended functional fixation hypothesis
    Hand, J.
  • The value relevance of German accounting measures: an empirical analysis
    Harris, T.; Lang, M.; Moller, H.
  • The value relevance of financial accounting information in a transition economy: the case of the Czech Republic
    Hellstrom, K.
  • Several bulletins from international monetary fund
  • Changes in accounting information value relevance and cash flow prediction: evidence from Korea
    Kim, J.; Key, K.
  • Accounting diversity and firm valuation
    King, R.D.; Langli, J.C.
  • Price and return models
    Kothari, S.P.; Zimmerman, J.L.
  • Changes in the value relevance of accounting information before and after the adoption of K-IFRS: evidence from Korea
    Kwon, G.J.
  • Changes in the value relevance of accounting information over time: evidence from the emerging market of China
    Lam, K.C.K.; Sami, H.; Zhou, H.
  • The declining association between earnings and returns
    Lim, S.C.; Park, T.
  • The value relevance of Brazilian accounting numbers: an empirical investigation
    Lopes, A.
  • Change in value-relevance of disclosed RPT across accounting regimes: evidence from Malaysia
    Maigoshi, Z.S.; Latif, A.; Kamardin, H.
  • A simple, positive semi-definite, heteroskedasticity and autocorrelation consistent covariance matrix
    Newey, W.; West, K.
  • Earnings, book values, and dividends in equity valuation
    Ohlson, J.A.
  • Value relevance of accounting information: evidence from South eastern European countries
    Pervan, I.; Bartulović, M.
  • Bulletins from Qatar National Vision 2008
  • Bulletins from Qatar Financial Markets Authority
  • Why has the contemporaneous linear returns-earnings relation declined?
    Ryan, S.G.; Zarowin, P.A.
  • Value relevance of IFRS mandatory disclosure requirements
    Tsalavoutas, I.; Dionysiou, D.
  • A heteroskedastic-consistent covariance matrix and a direct test for heteroskedasticity
    White, H.
  • The effect on the relationship between board of directors characteristics on firm performance in Oman: empirical study
    Al-Mtairi, E.; Al-Swidi, A.; BtFadzil, F.
  • Several bulletins from Qatar Stock Exchange