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On the Value Relevance of Asymmetric Financial Reporting Policies

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  • JEROEN SUIJS

Abstract

This paper considers an overlapping generations model where investors trade in a firm's stock. Investment risk is partly determined by the volatility of the stock price at which current investors can sell their shares to the next generation of investors. It is shown that asymmetric reporting of good and bad news is value relevant as it affects the allocation of risk among future generations of shareholders.

Suggested Citation

  • Jeroen Suijs, 2008. "On the Value Relevance of Asymmetric Financial Reporting Policies," Journal of Accounting Research, Wiley Blackwell, vol. 46(5), pages 1297-1321, December.
    • Handle: RePEc:bla:joares:v:46:y:2008:i:5:p:1297-1321
    DOI: 10.1111/j.1475-679X.2008.00309.x
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    Cited by:

    1. Jeremy Bertomeu & Edwige Cheynel, 2015. "Asset Measurement in Imperfect Credit Markets," Journal of Accounting Research, Wiley Blackwell, vol. 53(5), pages 965-984, December.
    2. Khalifa, Maha & Othman, Hakim Ben & Hussainey, Khaled, 2018. "The effect of ex ante and ex post conservatism on the cost of equity capital: A quantile regression approach for MENA countries," Research in International Business and Finance, Elsevier, vol. 44(C), pages 239-255.
    3. Beyer, Anne & Cohen, Daniel A. & Lys, Thomas Z. & Walther, Beverly R., 2010. "The financial reporting environment: Review of the recent literature," Journal of Accounting and Economics, Elsevier, vol. 50(2-3), pages 296-343, December.
    4. Lu, Tong & Ruan, Lijun, 2024. "Coordination and Conservatism," Finance Research Letters, Elsevier, vol. 61(C).
    5. Jeremy Bertomeu & Edwige Cheynel, 2016. "Disclosure and the Cost of Capital: A Survey of the Theoretical Literature," Abacus, Accounting Foundation, University of Sydney, vol. 52(2), pages 221-258, June.
    6. Xi Li, 2015. "Accounting Conservatism and the Cost of Capital: An International Analysis," Journal of Business Finance & Accounting, Wiley Blackwell, vol. 42(5-6), pages 555-582, June.
    7. Hao, Qian & Shi, Xiangyan & Bu, Danlu, 2018. "The Chinese stimulus program from 2008 to 2010 and accounting information quality," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 33(C), pages 64-78.
    8. Naveed Razzaq, Zhang Rui, 2018. "Does Conditional Conservatism affect the Cost of Capital? Evidence from China," Journal of Finance and Economics Research, Geist Science, Iqra University, Faculty of Business Administration, vol. 3(1), pages 57-70, March.
    9. He, Chaohua & Li, Yun, 2024. "Targeted poverty alleviation and the cost of equity capital: Evidence from China," Economics Letters, Elsevier, vol. 237(C).
    10. Palea Vera, 2013. "The Effect of the European Regulation 1606/2002 on Market Efficiency: Early Empirical Evidence and Some Suggestions for Future Research and Policy-Making Discussion," Department of Economics and Statistics Cognetti de Martiis. Working Papers 201310, University of Turin.
    11. Khalifa, Maha & Zouaoui, Haykel & Ben Othman, Hakim & Hussainey, Khaled, 2019. "Exploring the nonlinear effect of conditional conservatism on the cost of equity capital: Evidence from emerging markets," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 36(C), pages 1-1.
    12. Beatriz García & Juan M. Garcia Lara & Fenando Penalva, 2010. "Accounting Conservatism and Firm Investment Efficiency," Working Papers 1004, Departament Empresa, Universitat Autònoma de Barcelona, revised Jan 2010.
    13. Archana Jain & Chinmay Jain & Ashok Robin, 2020. "Does accounting conservatism deter short sellers?," Review of Quantitative Finance and Accounting, Springer, vol. 54(3), pages 1075-1100, April.
    14. Tan, Huan & Wang, Zhi, 2023. "The impact of confucian culture on the cost of equity capital: The moderating role of marketization process," International Review of Economics & Finance, Elsevier, vol. 86(C), pages 112-126.
    15. Dutta, Sunil & Nezlobin, Alexander, 2017. "Information disclosure, firm growth, and the cost of capital," Journal of Financial Economics, Elsevier, vol. 123(2), pages 415-431.
    16. Houcine, Asma, 2017. "The effect of financial reporting quality on corporate investment efficiency: Evidence from the Tunisian stock market," Research in International Business and Finance, Elsevier, vol. 42(C), pages 321-337.
    17. Zhang, Chenrui & Wang, Yatong, 2024. "Is enterprise digital transformation beneficial to shareholders? Insights from the cost of equity capital," International Review of Financial Analysis, Elsevier, vol. 92(C).
    18. García Lara, Juan Manuel & García Osma, Beatriz & Penalva, Fernando, 2016. "Accounting conservatism and firm investment efficiency," Journal of Accounting and Economics, Elsevier, vol. 61(1), pages 221-238.

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