The time series properties of the components of clean surplus earnings: UK evidence

Article Abstract:

The value relevance of clean surplus accounting rate of return (ARR) hinges on both its mean and on its time series dependence. This is suggested in a model which can use information about the time series properties of ARR for valuation. The model indicates that clean surplus ARR is value relevant if its mean varies from the cost of equity and/or if it demonstrates time series dependence. An analysis of the means of the disaggregated components of clean surplus ARR shows that profit from ordinary activities, the goodwill write-off component and the revaluations component are value relevant. Evidence on the implied value relevance of the clean surplus ARR of UK firms is supplied.

United Kingdom, Finance, Return on investment, Rate of return, Time-series analysis, Time series analysis, Corporations, British

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The articulation of returns and accounting-related variables when returns lead earnings: UK evidence

Article Abstract:

A study was conducted to analyze the effect of returns leading to earnings on the interactions between economic returns and three typically used accounting related ratios, namely, the market-to-book ratio, accounting rate of return or profitability and the price-earnings ratio. Predictions resulting from the analysis were tested using a sample of industrial, UK-based firms. Additional research on the setting used in the study could enhance this analysis in many ways.

Accounting Methods, Financial Management, Case studies, Accounting and auditing, Profits, Accounting, Valuation, Corporate profits, Book value (Accounting), Price-earnings ratio, Price earnings ratio, Ratio analysis

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Discussion of value relevance of mandated comprehensive income disclosures

Article Abstract:

Cahan, Courtenay, Gronewaller and Upton's paper on the value relevance of mandated comprehensive income disclosures is discussed.

Disclosure statements (Accounting)

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