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Consistency, Value Relevance and Sufficiency of Book for Market Values in Five Japanese Conglomerates Over the Period 1950–2004
Author(s) -
COOKE TERENCE,
OMURA TERUYO,
WILLETT ROGER
Publication year - 2009
Publication title -
abacus
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 0.632
H-Index - 45
eISSN - 1467-6281
pISSN - 0001-3072
DOI - 10.1111/j.1467-6281.2009.00279.x
Subject(s) - value (mathematics) , consistency (knowledge bases) , market value , construct (python library) , economics , accounting , econometrics , book value , relevance (law) , period (music) , financial economics , mathematics , statistics , political science , earnings , computer science , physics , geometry , acoustics , law , programming language
Market and accounting data for five Japanese conglomerates, Toyota, Fuji, Sony, Itochu and Sumitomo, are analysed over the period 1950 to 2004. Annual market value is regressed on three accounting and six macroeconomic variables, using a general‐to‐specific approach to construct simple error correction models for each of the five firms. The results show that in four of the five firms there is evidence of a long‐run relationship between market value and the net book value of assets, which can be interpreted, with increasing degrees of strength, as book values being either consistent with, value relevant for, or sufficient for market value.