The value relevance of accounting information: Evidence from Asian stock markets (Hong Kong, Malaysia, Singapore, Thailand, Indonesia, Philippines, Korea, China)

Accounting valuation has been an important topic in accounting research since the 1960s. However, few prior studies have investigated valuation models in Asian stock markets. This dissertation examines the value relevance of accounting information in seven Asian countries: Hong Kong, Malaysia, Singapore, Thailand, Indonesia, the Philippines and Korea, as well as in country groups and subgroups based on legal origins: the common-law group and the civil-law group (with subgroups of French origin and German origin). Using data from Compustat-Global-Vantage and IB/E/S for the period of 1988--2001, I employ a historical price model and a residual income model (Ohlson 1995) to test this dissertation's hypotheses. Value relevance is measured using the adjusted R2s, the explanatory powers of accounting variables in explaining market prices.; Three sets of research hypotheses are constructed. The first two sets of hypotheses investigate how the performance of value relevance differs across countries using an overall ranking for each country. The overall ranking includes a weighted sum of accrual versus cash accounting, historical cost versus market value accounting, the extent of choice between accounting methods, accounting models, standards-setting bodies, corporate ownership structure, alignment of accounting standards with tax requirements, enforcement mechanisms, and legal systems. The third set of hypotheses examines whether the residual income model that uses analysts' earnings forecasts provides greater value relevance than the historical price model.; The results show that the value relevance of accounting information tends to be greater for countries with higher overall ranking. The analyses indicate that value relevance is affected by country-specific factors such as accounting measurement rules, financial reporting systems and institutional factors. In addition, the adjusted R2 is higher for the residual income model than for the historical price model in some countries and groups of countries. The improvements are more significant in those countries or groups where public disclosure is more important for solving the information asymmetry between managers and investors.; The results have important implications for financial analysts, investors, stock exchanges, standard-setters, and regulators. Knowledge of existing financial reporting system and institutional structure differences and the effects of the differences is useful for financial analysts and investors to evaluate multi-jurisdiction investments. Stock exchanges and regulators will benefit from this dissertation by obtaining more evidence related to the debates on cross-listing requirements. Finally, the results are useful for international and domestic accounting standard setters addressing standards harmonization.