Has financial statement information become less relevant? Longitudinal evidence from Denmark

• Published in: Scandinavian journal of management Vol. 24; no. 4; pp. 375 - 387
• Main Authors: Thinggaard, Frank, Damkier, Jesper
• Format: Journal Article
• Language: English
• Published: Elsevier Ltd 01.12.2008; Elsevier
• Series: Scandinavian Journal of Management
• Subjects: EU accounting directives; Financial statement information; finansiell rapportering; Foreknowledge; Investment strategies; Loss of value-relevance; Loss of value-relevance Financial statement information Usefulness EU accounting directives Security returns Investment strategies Foreknowledge Portfolio returns test; loss of valuerelevance; Portfolio returns test; Security returns; Usefulness; Usefulness; EU accounting directives; Loss of value-relevance; Investment strategies; Security returns; Financial statement information; Portfolio returns test; Foreknowledge
• ISSN: 0956-5221; 1873-3387
• DOI: 10.1016/j.scaman.2008.06.001

Is financial statement information, such as earnings, assets and the book value of equity, still useful to investors in the “new economy age”, or should serious efforts be made by e.g. managers and researchers to improve the current financial reporting model or develop alternative reporting forms? This study investigates whether financial statement information in Denmark has become less value-relevant to investors over time. The study provides evidence from an accounting system which is based on both EU accounting directives and an “economic-substance-over-legal-form” philosophy throughout the investigated period. Overall, our results do not indicate that the value-relevance of accounting information has decreased over the investigated period (1983–2001), which is otherwise implied by some critics of “traditional” financial reporting. Rather, the results indicate that the value-relevance of accounting information is unchanged over the period.