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Accounting relevance and speculative intensity: empirical evidence from Greece

Panagiotis E. Dimitropoulos (Department of Sport Management, University of Peloponnese, Sparta, Greece)
Dimitrios Asteriou (School of Social Sciences, Hellenic Open University, Patras, Greece Department of Economics, City University, London, UK)

Journal of Applied Accounting Research

ISSN: 0967-5426

Article publication date: 23 November 2010

658

Abstract

Purpose

The aim of this paper is twofold: first, it aims to examine the relevance of earnings and book values on stock prices, and second, to test for the effect of speculative intensity on the relevance of accounting information between 1995 and 2004.

Design/methodology/approach

The data were collected from a sample of 101 non‐financial firms listed at the Athens Stock Exchange over the period 1996‐2004 and were analyzed using OLS regression models.

Findings

Results indicated that book values are not relevant when they are considered solely, but both earnings and book values are more relevant when they are simultaneously included in the model. Finally, taking into consideration the effect of speculative intensity, we observed that it has a positive and significant effect on stock prices yet the value relevance of earnings and book values has not changed even after controlling for speculation.

Practical implications

The findings can be used by analysts and capital market researchers since both must bear in mind the fact that the quality of the capital market and the quality of the stock prices are not constant over time. Consequently, the classical valuation models are misspecified and could yield significant bias if speculative intensity is not taken under consideration.

Originality/value

The findings provide a further insight on the issue of accounting relevance within the context of an emerging capital market like Greece. According to our knowledge this is the first study which concerns speculation as an important factor of accounting value relevance in an European country.

Keywords

Citation

Dimitropoulos, P.E. and Asteriou, D. (2010), "Accounting relevance and speculative intensity: empirical evidence from Greece", Journal of Applied Accounting Research, Vol. 11 No. 3, pp. 195-212. https://doi.org/10.1108/09675421011088134

Publisher

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Emerald Group Publishing Limited

Copyright © 2010, Emerald Group Publishing Limited

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