Discussion of Scale and the Scale Effect in Market‐based Accounting Research
59 citations recorded by the source corpus.
Easton and Sommers (ES) (2003) argue that cross-sectional differences in scale can interfere with the process of making appropriate inferences about estimated parameter coefficients when using cross-secdonal valuation models in market-based accounting research (MBAR). Such interference can occur whether the dependent variable is the total equity market value of a firm (and the independent variables are measured as firm values) or whether the dependent variable is the price per share of the firm (and the independent variables are measured on a^er share basis also). Specifically, they define that a 'scale effect' exists when large firms (as measured by total equity market value) exert undue infiuence on the estimated regression coefficients. They illustrate this by showing that the average values of studendzed residuals grouped by market value (market value/>er share) (where studentized residuals act as a measure of the influence of an individual observation on the estimated coefficients) vary with market value (market value per share) in ordinary least squares (OLS) regressions of market value (or market value jb r share) on earnings (or earnings per share) and book value (or book value per share) on US data. This variation is particularly extreme for
Subfields: Accounting, Strategy and Management
View Paper: https://www.semanticscholar.org/paper/2c6c2258e45736ebca6080b19a62e1c472c31b6a
Citations in the corpus
- Assessing the Value Relevance of Accounting Data After the Introduction of IFRS in Europe: The Value Relevance of Accounting Data under IFRS (2010, unknown): “Consensus on the best deflator has not been achieved (Akbar and Stark, 2003).”