Date of Award
UG Dissertation (Restricted)
This paper examines the value-relevance of financial statement information in the Hong Kong Growth Enterprise Market. While there is a positive and significant association between gross profit and stock prices, I find no evidence on the value-relevance of current earnings in this fast-growing, technology-based market. Furthermore, investors in this market regard some GAAP defined expenses as investments, suggesting they are more interested in the growth potential of a firm’s main business. In addition, book value is also positively and significantly associated with stock prices. Taken together, the evidence presented in this paper is consistent with the adaptation theory of Burgstahler and Dichev (1997): when earnings is relatively low to book value, earnings is not an important determinant of firm value, and book value becomes more important because the firm’s resources are likely to be adapted to some superior alternative use.
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Huang, T. A. (2004). Value-relevant information of Hong Kong growth enterprise market stocks (UG Dissertation, Lingnan University, Hong Kong).