Change in Inventory and Firm Valuation

Change in Inventory and Firm Valuation This study examines the effect of the informativeness of change in inventory on firm valuation. A firm's change in inventory is informative if its percentage change in cost of goods sold is positively and significantly associated with its lag one percentage of production added to inventory (a measure of change in inventory). Sample firms are divided into two groups: firms with informative change in inventory, and other firms. Analyses then are performed to examine the association between stock price and earnings. Results consistently show that the association is higher for firms with informative change in inventory. Thus, knowledge on the informativeness of change in inventory is useful for firm valuation. http://www.deepdyve.com/assets/images/DeepDyve-Logo-lg.png Review of Quantitative Finance and Accounting Springer Journals

Change in Inventory and Firm Valuation

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Publisher
Kluwer Academic Publishers
Copyright
Copyright © 2004 by Kluwer Academic Publishers
Subject
Finance; Corporate Finance; Accounting/Auditing; Econometrics; Operation Research/Decision Theory
ISSN
0924-865X
eISSN
1573-7179
D.O.I.
10.1023/B:REQU.0000006187.13978.80
Publisher site
See Article on Publisher Site

References

  • Relative versus Incremental Information Content
    Biddle, G. C.; Seow, G. S.; Siegel, A. F.
  • Taking Stock: A Critical Assessment of Recent Research on Inventories
    Blinder, A. S.; Maccini, L. J.

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