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How does leverage affect the value relevance? Evidence from Turkey.
- Source :
- Spanish Journal of Finance & Accounting / Revista Espanola de Financiacion y Contabilidad; Jun2021, Vol. 50 Issue 2, p246-267, 22p
- Publication Year :
- 2021
-
Abstract
- 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. [ABSTRACT FROM AUTHOR]
- Subjects :
- BOOK value
VALUATION
DEBT
CAPITAL structure
FINANCE
MARKET value
FINANCIAL leverage
Subjects
Details
- Language :
- English
- ISSN :
- 02102412
- Volume :
- 50
- Issue :
- 2
- Database :
- Complementary Index
- Journal :
- Spanish Journal of Finance & Accounting / Revista Espanola de Financiacion y Contabilidad
- Publication Type :
- Academic Journal
- Accession number :
- 150447318
- Full Text :
- https://doi.org/10.1080/02102412.2020.1786946