Discussion of conservatism, growth and the role of accounting numbers in fundamental analysis process

• 成果类型: Editorial Material
• 署名作者: Zhang, XJ
• 署名单位: University of California System; University of California Berkeley
• 刊物名称: REVIEW OF ACCOUNTING STUDIES
• ISSN/ISSBN: 1380-6653
• DOI: 10.1007/s11142-005-1531-7
• 发表日期: 2005
• 页码: 261-267
• 关键词: depreciation; amortization; valuation

摘要

This paper discusses Monahan's empirical study of how conservative accounting of R&D affects the relations (i) between earnings and stock return; (ii) between estimates of value using the residual income valuation model and equity market value. My discussion focuses on the underlying mechanism of why growth matters and how the growth rate should be measured. In particular, I argue that different aspects of growth (e.g., short-term growth versus long-term growth) matter under different circumstances, depending on the intended use of accounting data. Failure to adjust for these differences affects the effectiveness of the empirical tests. The discussion also considers the impacts of potential noise in the R&D capitalization procedure and the presence of other intangible assets.