Trends in Earnings, Book Value and Stock Price Relationships: An International Study

Prior international studies that investigate the relative usefulness of accounting information have focused either on the incremental information content of earnings reconciliation, or the relative information content of accounting numbers across countries. Using a sample of 13 countries, this paper extends the literature by providing empirical evidence on whether the value relevance of accounting numbers in different countries has changed over time and whether the patterns of changes differ across countries. In particular, the study analyzes factors that may cause the differences among countries. The study finds that there are differences in value relevance of accounting information across countries, and that these differences may be explained by disclosure practices and market efficiency.