Discussion of Revalued Financial, Tangible, and Intangible Assets: Association with Share Prices and Non Market-Based Value Estimates

Posted: 26 Jan 1999

See all articles by Peter D. Easton

Peter D. Easton

University of Notre Dame - Department of Accountancy

Abstract

The focus of this discussion is on the possible effects of scale in regressions that have price (or value) per share as the dependent variable. My argument rests on the fact that this dependent variable may reflect no more than the choice by management of the number of shares outstanding. Management may change the per share magnitude of firm attributes by means of stock-splits, stock dividends and/or reverse stock-splits without changing the economic characteristics of the firm. It follows that statistically significant coefficient estimates in regressions of share price on balance sheet data and income statement data may be of a spurious effect of scale.

JEL Classification: G12, M41, C51

Suggested Citation

Easton, Peter D., Discussion of Revalued Financial, Tangible, and Intangible Assets: Association with Share Prices and Non Market-Based Value Estimates. Available at SSRN: https://ssrn.com/abstract=143833

Peter D. Easton (Contact Author)

University of Notre Dame - Department of Accountancy ( email )

Mendoza College of Business
Notre Dame, IN 46556-5646
United States
574-631-6096 (Phone)
574-631-5127 (Fax)

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