VALUATION IMPLICATIONS OF EXCEPTIONAL AND EXTRAORDINARY ITEMS

Author: Ballas A.A.

Source: The British Accounting Review, Volume 31, Number 3, September 1999 , pp. 281-295(15)

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Abstract:

This paper uses a valuation framework to examine whether exceptional and extraordinary items (as traditionally defined) have the same valuation implications with income from ordinary activities. British company data covering an 11-year (1980–90) period are used. The empirical model used in the study posits a log-log relationship between income from ordinary activities, exceptional and extraordinary items, and book value of equity at the previous accounting year-end and market prices. There is some evidence that both exceptional and extraordinary items are priced by the market and that extraordinary items may not be combined with exceptional items or with income from ordinary activities. Copyright 1999 Academic Press

Language: English

Document Type: Research article

Affiliations: 2A, Athinas Av & Areos Str, Vouliagmeni, Athens, 16671, Greece

Publication date: 1999-09-01