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Economic Development and the Value‐Relevance of Accounting Information — A Disclosure Transparency Perspective

Tony Kang (School of Accountancy, Singapore Management University, 469 Bukit Timah Road, Singapore 259756)
Yang Hoong Pang (School of Accountancy, Singapore Management University, 469 Bukit Timah Road, Singapore 259756)

Review of Accounting and Finance

ISSN: 1475-7702

Article publication date: 1 January 2005

875

Abstract

Extending prior studies which suggest that the disclosure practice of developed economy entities tends to be more transparent than that of emerging economy entities, this study investigates whether such differences in the degree of disclosure transparency translate into different levels of value‐relevance of their accounting summary measures (i.e., book values and earnings). Consistent with theories that link disclosure quality with the impact of disclosure on investors' decisions, the evidence indicates that the accounting summary measures of developed economy entities are more value‐relevant than those of emerging economy entities in the U.S. stock market. This finding has some implications for the current policy debate in IASB regarding accounting for emerging economy entities.

Keywords

Citation

Kang, T. and Hoong Pang, Y. (2005), "Economic Development and the Value‐Relevance of Accounting Information — A Disclosure Transparency Perspective", Review of Accounting and Finance, Vol. 4 No. 1, pp. 5-31. https://doi.org/10.1108/eb043416

Publisher

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Emerald Group Publishing Limited

Copyright © 2005, Emerald Group Publishing Limited

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