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The Usefulness Of Chilean Inflation Accounting

Author

Listed:
  • ROSS JENNINGS

    (University of Texas at Austin)

  • GUSTAVO MATURANA

    (Escuela de Administración, Pontificia Universidad Católica de Chile)

Abstract

This study examines the usefulness to investors of the “monetary correction” (corrección monetaria) required under Chilean accounting standards. The monetary correction arises when nonmonetary assets and liabilities and owners’ equity are restated for changes in the purchasing power of the Chilean peso, and when assets and liabilities denominated in other currencies are restated for changes in the exchange rate between that currency and the Chilean peso. We provide three separate sets of empirical results that examine the relation between the monetary correction and both unexpected returns and security prices, conditional on the remainder of reported earnings. Taken together, the results suggest that the monetary correction provides useful information for investors.

Suggested Citation

  • Ross Jennings & Gustavo Maturana, 2005. "The Usefulness Of Chilean Inflation Accounting," Abante, Escuela de Administracion. Pontificia Universidad Católica de Chile., vol. 8(1), pages 85-118.
    • Handle: RePEc:pch:abante:v:8:y:2005:i:1:p:85-118
    as

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    File URL: http://www.abante.cl/files/ABT/Contenidos/Vol-8-N1/Maturana.pdf
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    References listed on IDEAS

    as
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    Full references (including those not matched with items on IDEAS)

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    More about this item

    Keywords

    Inflation accounting; Purchasing power gain/loss; Asset pricing; Emerging markets; Chile;
    All these keywords.

    JEL classification:

    • M41 - Business Administration and Business Economics; Marketing; Accounting; Personnel Economics - - Accounting - - - Accounting
    • G12 - Financial Economics - - General Financial Markets - - - Asset Pricing; Trading Volume; Bond Interest Rates
    • G14 - Financial Economics - - General Financial Markets - - - Information and Market Efficiency; Event Studies; Insider Trading
    • G15 - Financial Economics - - General Financial Markets - - - International Financial Markets

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