Conservative accounting and equity valuation

• 成果类型: Article
• 署名作者: Zhang, XJ
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/S0165-4101(00)00016-1
• 发表日期: 2000
• 关键词: earnings

摘要

This paper examines how conservative accounting affects the relation between accounting data and firm value. The analysis shows that conservative accounting can be characterized equivalently in terms of book value, earnings, or book rate of return. Furthermore, capitalized earnings generally provide a less biased estimate of equity value than book value does. In addition, firm growth affects the way earnings and book value are combined in valuation. A weighted average of book value and capitalized earnings, with the weight on earnings being an increasing and convex function of growth, yields an asymptotically unbiased estimate of equity value. When growth is positive, the weight on book value is negative. (C) 2000 Elsevier Science B.V. All rights reserved. JEL classification: M41; G12.