The Value Relevance of Earnings and Book Value: The Importance of Ownership Concentration and Firm Size
Pathirawasam Chandrapala
Keywords:
Accounting information, book value, earnings, ownership concentration, firm size
Abstract:
The purpose of this paper is to investigate the impact of ownership concentration and firm size
on value relevance of two accounting variables, earnings and book value, given by firms listed in
Colombo Stock Exchange (CSE) in Sri Lanka from 2005 to 2009. Using pooled cross-sectional
data regressions, the study finds that the value relevance of earnings and book value is below
average. The value relevance of ownership concentrated firms is higher than that of ownership
non-concentrated firms. Further, the two variables show higher value relevance for larger firms
than for smaller firms. Contrary to the previous findings of the author, the study finds that book
value is more value relevant than the earnings in Sri Lanka.
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10.7441/joc.2013.02.07
Pathirawasam Ch. (2013). The Value Relevance of Earnings and Book Value: The Importance of Ownership
Concentration and Firm Size. Journal of Competitiveness, 5 (2), 98-107 https://doi.org/10.7441/joc.2013.02.07
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