BMAN30071 SHARE PRICES AND ACCOUNTING INFORMATION 2022
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BMAN30071
SHARE PRICES AND ACCOUNTING INFORMATION
25 January 2022
Question 1
In 1989 Lev reviewed twenty years of empirical return-earnings studies and concluded that the findings in most studies suggested a weak association between returns and earnings. Summarise the arguments and observations in Lev and discuss the extent to which arguments and findings in the subsequent literature have challenged, or supported, the main conclusion in Lev. (50 marks)
Question 2
Gelb and Zarowin examine the association between disclosure quality and share price anticipation of earnings. Review the research in Gelb and Zarowin by discussing their (i) hypothesis, (ii) research design, and (iii) empirical findings. Discuss which firm attributes other than disclosure quality are likely to affect share price anticipation of earnings and explain why the results in Gelb and Zarowin are unlikely to be driven by these other firm attributes. (50 marks)
Question 3
Research has focused on book value of equity as an explanatory variable in accounting based valuation models. Describe and assess two models in which valuation depends on book value of equity. How do the two models compare (i) with each other and (ii)
with the simple earnings capitalisation model? (50 marks)
Question 4
Recent accounting research has focused on the value-relevance of narrative management statements and the value-relevance of their textual characteristics. Review two studies from this stream of the recent accounting literature by discussing (i) hypotheses, (ii) research design, and (iii) empirical findings. Briefly, what do you see as the main difference between the two reviewed studies? (50 marks)
2023-01-14