Accounting Earnings And Share Revaluation: Further Exploration

Abstract

This paper attempts to address the issue of whether the widely documented evidence of the effect of ‘accounting eamings on share prices in a few institutionally more developed capital markets is also ‘applicable toa less developed emerging market. The price effect of earnings disclosures is found to be Jess pronounced in an institutionally fess developed emerging market. This paper also shows that, while ‘significant pice-to-earnings relation i evident, the a) strength, (b) consistency and (c) magnitude of he relation are not as pronounced as reported in institutionally more developed markets. The price ‘adjustment measured is more pronounced in a long window, which is consistent with speculative wading in emerging markets. Firm-specific variables such as revenue, firm size, and debt-equity have no effect on prices.