INFLUENCE OF FINANCIAL STATEMENT DATA ON FORMATION OF THE COMPANY’S MARKET VALUE

Abstract

One of the sources of information used in the process of making managerial decisions is public financial reporting of corporations. On its basis, the company’s financial condition, business reputation and investment attractiveness are assessed. Indicator of the latter is result of a comparison of the market value of the company with its estimate, which is presented in financial statements. Since, with the help of existing accounting methods, it is not possible to adequately form information on market value in financial statements, the effectiveness of investment decision depends essentially on a model used to evaluate the components when preparing the financial statements.
To determine the influence of financial reporting indicators on the market value of the company, financial statements of 44 transnational corporations reporting by IFRS / IAS (19 enterprises) and by US GAAP (25 enterprises) in 2014–2016 were researched using the multi-factor regression with panel data. The authors found that, depending on the financial reporting framework (US GAAP or IFRS / IAS), the market value of the company is sensitive to various indicators presented in its reporting.
The article substantiates the assumption that this is due to different degrees of application of the model of objects valuation at fair value within the specified accounting systems. The authors conclude that extended application in the current accounting of asset valuation at fair value increases the informational value of financial statements of issuers of securities for professional stock market participants.