Premium
Retracted: The Value‐relevance of Equity Accounted Carrying Amounts and Disclosed Fair Values of Listed Associates
Author(s) -
Badenhorst Wessel M.,
Brümmer Leon M.,
Wet Johannes H.vH.
Publication year - 2016
Publication title -
australian accounting review
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.551
H-Index - 36
eISSN - 1835-2561
pISSN - 1035-6908
DOI - 10.1111/auar.12089
Subject(s) - fair value , equity (law) , accounting , sample (material) , value (mathematics) , business , relevance (law) , book value , actuarial science , equity value , economics , finance , statistics , political science , mathematics , earnings , law , chromatography , debt levels and flows , external debt , debt , chemistry
Equity accounting is a controversial accounting treatment. Although fair value measurement represents a potential alternative measurement base, information content may be lost under a pure fair value measurement approach. This study investigates the value‐relevance of equity accounted carrying amounts and disclosed fair values of listed associates, using a sample of the largest firms listed in South Africa, Australia and the UK. The main finding is that the alternative measurement bases are incrementally value‐relevant during the sample period of 31 December 2005 to 31 December 2011, implying that equity investors do not blindly accept either measurement base. Rather, investors include their own assessment of the intrinsic value of an entity's listed associates in their valuations.