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

초록

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.

키워드