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Fair value accounting and value relevance of equity book value and net income for European financial firms during the crisis
journal contribution
posted on 2023-06-07, 07:01 authored by Sami AdwanSami Adwan, Alaa Alhaj-Ismail, Claudia GirardoneThis paper examines whether and how the level of exposure to fair value accounting moderates the changes in the value relevance of equity book value and net income during a crisis period. Using a sample of European listed financial firms over 2005–2011, our analysis confirms prior literature that the value relevance of book value of equity increases, while that of net income decreases during the financial crisis. More importantly, our findings offer robust support for the hypothesis that the impact of the crisis is less pronounced for firms whose financial statements are more exposed to fair value accounting. This evidence can be explained by the increased valuation weight placed by investors on the book value of equity relative to net income for firms with more exposure to fair value in the pre-crisis period.
History
Publication status
- Published
File Version
- Accepted version
Journal
Journal of International Accounting, Auditing and TaxationISSN
1061-9518Publisher
ElsevierVolume
39Page range
1-12Article number
a100320Department affiliated with
- Accounting and Finance Publications
Full text available
- Yes
Peer reviewed?
- Yes
Legacy Posted Date
2020-05-18First Open Access (FOA) Date
2022-05-22First Compliant Deposit (FCD) Date
2020-05-15Usage metrics
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