Value Relevance of Reported Earnings under Conservative Accounting Versus under Mark to Market Accounting

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Guo Ying Luo
Guo Ying Luo
1 McMaster University

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This paper compares the value relevance of earnings under two different accounting methods (namely, conservative accounting and mark to market accounting) in a competitive security market. It proves that the reported earnings are value relevant under both types of accounting methods. Furthermore, if the proportion of earnings fixated traders lies in the upper range of the interval [0,1], the reported earnings under conservative accounting are more value relevant than the ones under mark to market. Otherwise, the reported earnings under mark to market are more value relevant than the ones under conservative accounting.

18 Cites in Articles

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Funding

No external funding was declared for this work.

Conflict of Interest

The authors declare no conflict of interest.

Ethical Approval

No ethics committee approval was required for this article type.

Data Availability

Not applicable for this article.

Guo Ying Luo. 2013. \u201cValue Relevance of Reported Earnings under Conservative Accounting Versus under Mark to Market Accounting\u201d. Global Journal of Management and Business Research - D: Accounting & Auditing GJMBR-D Volume 13 (GJMBR Volume 13 Issue D4): .

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Issue Cover
GJMBR Volume 13 Issue D4
Pg. 23- 27
Journal Specifications

Crossref Journal DOI 10.17406/GJMBR

Print ISSN 0975-5853

e-ISSN 2249-4588

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v1.2

Issue date

August 6, 2013

Language

English

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This paper compares the value relevance of earnings under two different accounting methods (namely, conservative accounting and mark to market accounting) in a competitive security market. It proves that the reported earnings are value relevant under both types of accounting methods. Furthermore, if the proportion of earnings fixated traders lies in the upper range of the interval [0,1], the reported earnings under conservative accounting are more value relevant than the ones under mark to market. Otherwise, the reported earnings under mark to market are more value relevant than the ones under conservative accounting.

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Value Relevance of Reported Earnings under Conservative Accounting Versus under Mark to Market Accounting

Guo Ying Luo
Guo Ying Luo McMaster University

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