What is it about?
We find evidence that accounting earnings are more value relevant than cash flows. We also find negative relation of earnings changes with stock returns and argue that this is due to the lower persistence of negative earnings levels and changes. Finally, we find that the value relevance of accounting information in Serbia increases after the improvements in capital market regulation.
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Why is it important?
We add to the body of literature on value relevance in emerging and transition economies, value relevance in times of regulatory changes, and the relative and incremental value relevance of accounting earnings and cash flows. Our results imply that policymakers in transition economies should improve the accounting and capital market regulation to provide better investor protection and to improve the capital market conditions.
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This page is a summary of: Value relevance of accounting earnings and cash flows in a transition economy: the case of Serbia, Journal of Accounting in Emerging Economies, August 2022, Emerald, DOI: 10.1108/jaee-12-2021-0411.
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