Does Replacement Cost Restatement Affect the Intra-Industry Ranking of Firms?
Financial statements are only valuable on a comparative basis. Alternate accounting models provide very different financial statement figures and various industry effects. This may cause a consistent change for all firms in an industry. If so, current cost data will not provide new insight into intr...
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Veröffentlicht in: | Financial analysts journal 1986-05, Vol.42 (3), p.72-75 |
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creator | Lovata, Linda M. Philipich, Kirk L. |
description | Financial statements are only valuable on a comparative basis. Alternate accounting models provide very different financial statement figures and various industry effects. This may cause a consistent change for all firms in an industry. If so, current cost data will not provide new insight into intra-industry rankings. This issue was studied in 2 steps: 1. Correlation coefficients were calculated to assess the impact of current cost disclosures on the relative rankings of firms within an industry. 2. Factors influencing the level of correlation within an industry were determined. W. C. Norby's (1983) hypothesis is that asset turnover, capital intensity, and flow-through would substantially affect new information provided by current cost disclosures. Using replacement cost data from the Financial Accounting Standards Board and historical cost data from Value Line tapes, this study confirmed Norby's hypothesis. It also confirmed evidence that current cost disclosures may not be worth the cost of providing. |
doi_str_mv | 10.2469/faj.v42.n3.72 |
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Alternate accounting models provide very different financial statement figures and various industry effects. This may cause a consistent change for all firms in an industry. If so, current cost data will not provide new insight into intra-industry rankings. This issue was studied in 2 steps: 1. Correlation coefficients were calculated to assess the impact of current cost disclosures on the relative rankings of firms within an industry. 2. Factors influencing the level of correlation within an industry were determined. W. C. Norby's (1983) hypothesis is that asset turnover, capital intensity, and flow-through would substantially affect new information provided by current cost disclosures. Using replacement cost data from the Financial Accounting Standards Board and historical cost data from Value Line tapes, this study confirmed Norby's hypothesis. 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Alternate accounting models provide very different financial statement figures and various industry effects. This may cause a consistent change for all firms in an industry. If so, current cost data will not provide new insight into intra-industry rankings. This issue was studied in 2 steps: 1. Correlation coefficients were calculated to assess the impact of current cost disclosures on the relative rankings of firms within an industry. 2. Factors influencing the level of correlation within an industry were determined. W. C. Norby's (1983) hypothesis is that asset turnover, capital intensity, and flow-through would substantially affect new information provided by current cost disclosures. Using replacement cost data from the Financial Accounting Standards Board and historical cost data from Value Line tapes, this study confirmed Norby's hypothesis. It also confirmed evidence that current cost disclosures may not be worth the cost of providing.</description><subject>Asset income</subject><subject>Comparative analysis</subject><subject>Correlation coefficients</subject><subject>Current ratio</subject><subject>Debt to equity ratio</subject><subject>Disclosure</subject><subject>Financial advisers</subject><subject>Financial ratios</subject><subject>Financial services industries</subject><subject>Financial statements</subject><subject>Historical cost</subject><subject>Historical cost accounting</subject><subject>Hypotheses</subject><subject>Net income</subject><subject>Regression analysis</subject><subject>Replacement cost accounting</subject><subject>Replacement costs</subject><subject>Replacement value</subject><subject>Stock prices</subject><subject>Technical Notes</subject><issn>0015-198X</issn><issn>1938-3312</issn><fulltext>true</fulltext><rsrctype>article</rsrctype><creationdate>1986</creationdate><recordtype>article</recordtype><recordid>eNo9kE1LAzEURYMoWKtLdy6C-xknn5OspFSrhYpQunAX0kyiHdukJqnQf29kxNXjXQ7vXQ4A16ipMeXyzum-_qa49qRu8QkYIUlERQjCp2DUNIhVSIq3c3CRUl9WTCgbgZeHYBNc2v1WG7uzPsNpSLkEKes8BBPnrMkwf1g49znqau67Q8rxCJfaf278OwwOzjZxl-4vwZnT22Sv_uYYrGaPq-lztXh9mk8ni8oITirHLGuFFRKbBllHmCVGaslYxxlZa9qtS1nTMIG0a6Xma865ZNZwarHAXUfG4HY4u4_h61Cqqj4coi8fFUYSSSowKVA1QCaGlKJ1ah83Ox2PCjXq15cqvlTxpTxRLS78zcD3KYf4D1PaCkk4-QE3f2fs</recordid><startdate>19860501</startdate><enddate>19860501</enddate><creator>Lovata, Linda M.</creator><creator>Philipich, Kirk L.</creator><general>The Financial Analysts Federation</general><general>Taylor & Francis Ltd</general><scope>AAYXX</scope><scope>CITATION</scope><scope>8BJ</scope><scope>FQK</scope><scope>JBE</scope></search><sort><creationdate>19860501</creationdate><title>Does Replacement Cost Restatement Affect the Intra-Industry Ranking of Firms?</title><author>Lovata, Linda M. ; Philipich, Kirk L.</author></sort><facets><frbrtype>5</frbrtype><frbrgroupid>cdi_FETCH-LOGICAL-c863-f5e578e892c01ef35e3c9a955d653ba4db015c0581af79a6b66695ec64e282dd3</frbrgroupid><rsrctype>articles</rsrctype><prefilter>articles</prefilter><language>eng</language><creationdate>1986</creationdate><topic>Asset income</topic><topic>Comparative analysis</topic><topic>Correlation coefficients</topic><topic>Current ratio</topic><topic>Debt to equity ratio</topic><topic>Disclosure</topic><topic>Financial advisers</topic><topic>Financial ratios</topic><topic>Financial services industries</topic><topic>Financial statements</topic><topic>Historical cost</topic><topic>Historical cost accounting</topic><topic>Hypotheses</topic><topic>Net income</topic><topic>Regression analysis</topic><topic>Replacement cost accounting</topic><topic>Replacement costs</topic><topic>Replacement value</topic><topic>Stock prices</topic><topic>Technical Notes</topic><toplevel>peer_reviewed</toplevel><toplevel>online_resources</toplevel><creatorcontrib>Lovata, Linda M.</creatorcontrib><creatorcontrib>Philipich, Kirk L.</creatorcontrib><collection>CrossRef</collection><collection>International Bibliography of the Social Sciences (IBSS)</collection><collection>International Bibliography of the Social Sciences</collection><collection>International Bibliography of the Social Sciences</collection><jtitle>Financial analysts journal</jtitle></facets><delivery><delcategory>Remote Search Resource</delcategory><fulltext>fulltext</fulltext></delivery><addata><au>Lovata, Linda M.</au><au>Philipich, Kirk L.</au><format>journal</format><genre>article</genre><ristype>JOUR</ristype><atitle>Does Replacement Cost Restatement Affect the Intra-Industry Ranking of Firms?</atitle><jtitle>Financial analysts journal</jtitle><date>1986-05-01</date><risdate>1986</risdate><volume>42</volume><issue>3</issue><spage>72</spage><epage>75</epage><pages>72-75</pages><issn>0015-198X</issn><eissn>1938-3312</eissn><coden>FIAJA4</coden><abstract>Financial statements are only valuable on a comparative basis. Alternate accounting models provide very different financial statement figures and various industry effects. This may cause a consistent change for all firms in an industry. If so, current cost data will not provide new insight into intra-industry rankings. This issue was studied in 2 steps: 1. Correlation coefficients were calculated to assess the impact of current cost disclosures on the relative rankings of firms within an industry. 2. Factors influencing the level of correlation within an industry were determined. W. C. Norby's (1983) hypothesis is that asset turnover, capital intensity, and flow-through would substantially affect new information provided by current cost disclosures. Using replacement cost data from the Financial Accounting Standards Board and historical cost data from Value Line tapes, this study confirmed Norby's hypothesis. 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source | Business Source Complete; Jstor Complete Legacy |
subjects | Asset income Comparative analysis Correlation coefficients Current ratio Debt to equity ratio Disclosure Financial advisers Financial ratios Financial services industries Financial statements Historical cost Historical cost accounting Hypotheses Net income Regression analysis Replacement cost accounting Replacement costs Replacement value Stock prices Technical Notes |
title | Does Replacement Cost Restatement Affect the Intra-Industry Ranking of Firms? |
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