Change in the value relevance of accounting information for different capital structures over time: MİST countries

By using a dataset belonging to Mexico, Indonesia, South Korea and Turkey over the period of 2005-2014 and by employing Price Model based on two different stock prices, changes in total value relevance (VR) and in the VR of book value of equity (BVE) and earnings over time are analysed. The change over time is obtained by dividing the analysed period into two equal five-year subperiods. Furthermore, for each country, the whole sample is divided into five equal groups (quintiles) for each year with respect to different financial leverage levels and the VR of BVE and earnings are compared over time for different leverage levels. Additionally, this thesis studies the ranking of BVE and earnings among different quintiles. With a few exceptions, results show that total VR in the second sub-period is not reported as greater than total value relevance in the first sub-period and the VR of BVE (earnings) in the second sub-period is not reported as significantly greater than the VR of BVE (earnings) in the first subperiod. Except for certain quintiles of Korea (Mexico and Indonesia), the VR of BVE (earnings) does not significantly increase over time. The argument which asserts that the VR of BVE decreases with the increase in the financial leverage is only confirmed by Korea with an exception and Indonesia. Except for Korea, the argument which asserts that the VR of earnings decreases with the increase in the financial leverage cannot be confirmed.