Factors that affect the market interpretation of financial statements and other disclosures.

摘要

Because of the fundamental importance of relations between firm value and accounting measures such as earnings and book value, accounting researchers are interested in identifying factors that influence these relations. In this study, I question whether factors that are associated with the level of institutional ownership in firms are also associated with relations between firm value and accounting measures. These factors may include both things that firms do that attract institutional investors and things that firms do in response to higher institutional ownership such as specific investment, governance, and financial reporting practices that influence cost of capital and risk. I address this question by investigating whether the explanatory power of an empirical model that relates firm value to earnings and book value is different for firms that have high institutional ownership and firms that have low institutional ownership. I find that the explanatory power of the model for the high institutional ownership group is significantly greater than for the low institutional ownership subgroup, indicating more homogeneity in factors that influence relations between firm value and accounting measures for the high institutional ownership subgroup. I test whether this difference is due to differences in the size of firms across these subgroups and find that the results hold after controlling for size. My findings have two types of research implications. One is that they provide some guidance for future research that investigates how firm policies and practices may influence the value implications of accounting measures. Another is that they suggest that institutional ownership may be a useful proxy for contextual factors that influence relations between firm value and accounting measures in value-relevance studies.;In the second part, I investigate factors that influence the surprise associated with announcement of seasoned equity offerings (SEOs). In particular, I look at factors such as the firm's financial need, growth opportunities and the portion of the firm being sold. Prior research has shown that the market typically responds negatively to the announcement of a seasoned equity offering. I find that the negative response to SEO announcements increases with the portion of the firm being sold and decreases with growth opportunities represented by Tobin's Q, but is not affected by other factors associated with financial need that I study.