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High-levered firms have serious concerns related to avoiding covenant violations and meeting the needs of their creditors. Accounting information of those firms should be less value relevant for market participants. Based on a sample of Turkish listed firms over 2009–2018, we analyse whether the value relevance of accounting information is significantly lower for high-levered firms. For this purpose, we group observations with no net debt and divide the rest into quintiles based on leverage levels. We conclude that the value relevance of both earnings and book value of equity is lower for the high-levered quintile than the rest. Moreover, the value relevance of earnings is moderated more than the value relevance of book value of equity for the high-levered quintile. Last, book value of equity is more dominant in the valuation of the high-levered quintile than the valuation of the rest. WOS:000578388200001 Q4

Purpose – This study analyses how the mechanical interdependency affects the value relevance inferences by considering the Price Model. Design/methodology/approach – As the Price Model employs reported earnings together with book value of equity (BVE), it induces a mechanical interdependency since earnings are partially integrated to BVE via the net income available to owners of parent item. We suggest researchers subtract this item from BVE prior to analyses. We perform analyses by employing the Price Model with the unadjusted (or reported) version BVE and the Price Model with the adjusted version of BVE. Findings – The Price Model with unadjusted BVE figures generates value irrelevant earnings figures which is contrary to expectations. However, as per our suggestion, after adjusting BVE for the net income available to owners of parent item, earnings become value relevant. Discussion – Although no mechanical interdependency does exist at conventional statistical significance levels, researchers should know data they work in value relevance studies as both independent variables of the Price Model is partially integrated which may yield incorrect value relevance inferences.

As a result of amendments in existing financial reporting standards, certain items have been transferred (or recycled) from other comprehensive income to income statement since 2013. Based on a sample of Turkish listed firms over 2013-2018, we document the following outcomes for accounting quality, measured by value relevance and predictive power, of recycling. First, recycling is not value relevant, and net income with recycling and net income are equally value relevant. In other words, recycling does not provide useful information for valuation purposes. Second, net income with recycling and net income have statistically indifferent predictive powers