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Reevaluation of Revaluations: A Cross‐Country Examination of the Motives and Effects on Future Performance
Author(s) -
Barlev Benzion,
Fried Dov,
Haddad Joshua Rene,
Livnat Joshua
Publication year - 2007
Publication title -
journal of business finance and accounting
Language(s) - English
Resource type - Journals
SCImago Journal Rank - 1.282
H-Index - 77
eISSN - 1468-5957
pISSN - 0306-686X
DOI - 10.1111/j.1468-5957.2007.02019.x
Subject(s) - economics , sample (material) , asset (computer security) , capital (architecture) , politics , set (abstract data type) , monetary economics , international economics , political science , geography , chemistry , computer security , archaeology , chromatography , computer science , law , programming language
This study examines the motives for asset revaluations in a sample drawn from 35 countries that permit asset revaluations. Prior studies that examined this issue concentrated on one or two countries, the UK and Australia, and showed that revaluations are related to financing needs, the capital intensity of the firm as well as issues related to political costs. The previous literature also found that revaluations were indicators of improved future performance and that performance was related to the magnitude of the revaluations. This study shows that although the conclusions drawn from the previous studies are applicable to countries that are similar to the UK and Australia, they do not hold when applied to a much larger set of countries and that the motivations for and effects of revaluation are not uniform across various country classifications.