The value-relevance of equity accounted carrying amounts and disclosed fair values of listed associates

摘要

Equity accounting is a controversial accounting treatment. Although fairvalue measurement represents a potential alternative measurement base, informationcontent may be lost under a pure fair value measurement approach. This studyinvestigates the value-relevance of equity accounted carrying amounts and disclosedfair values of listed associates, using a sample of the largest firms listed in SouthAfrica, Australia and the United Kingdom. The main finding is that the alternativemeasurement bases are incrementally value-relevant during the sample period of31 December 2005 to 31 December 2011, implying that equity investors do not blindlyaccept either measurement base. Rather, investors include their own assessment of theintrinsic value of an entity’s listed associates in their valuations.