The Role of Financial Statement Comparability in Corporate Valuation: Evidence Based on BM Anomaly

• Published in: 신산업경영저널 Vol. 41; no. 2; pp. 69 - 91
• Main Authors: Su-Young Choi(최수영), Heejeong Shin(신희정)
• Format: Journal Article
• Language: English
• Published: 이화여자대학교 경영연구소 01.12.2023; 경영연구소
• Subjects: 경영학; 재무제표 질적특성; 시장효율성; Qualitative Characteristics; Market Efficiency; 장부가-시가 이상현상; 재무제표 비교가능성; BM Anomaly; Financial Statement Comparability
• ISSN: 2671-9223; 2713-5969
• DOI: 10.30753/emr.2023.41.2.004

This study investigates the role of financial statement comparability in corporate valuation, presenting empirical evidence based on the BM anomaly, or value effect. A series of regressions on data of KSE-listed firms for the period 2011-2020 reveal that firms with high comparability contribute to reducing the abnormal stock returns associated with BM anomaly, on average. This indicates that high comparability of financial statements is useful for more accurately accessing equity values and mitigates stock mispricing in capital market. Additionally, the effect of comparability in reducing mispricing is not significant in high BM firms (i.e., Value stocks) involved in the risk-reward relationship inherent in value investing. This study is valuable to the literature on the qualitative characteristics of financial statements by suggesting the role of comparability in enhancing market efficiency. KCI Citation Count: 0