- In the past decades, there have been many studies on the usefulness of accounting information (Easton and Harris, 1991. - (1999) documents the change in the value relevance of accounting information is really happened. - Moreover, Blair and Wallman (2001) argue that overall corporate value relevance of accounting information has declined over the last decades. - Han (1998) reports that the usefulness of accounting information has deteriorated in the Republic of Korea.. - However, unlike these studies, Collins, Maydew, and Weiss (1997) report that the combined value relevance of accounting earnings and book value increased over the past 40 years and that these findings are contrary to previous studies. - They argue that the value relevance of accounting earnings decline with time, while the value relevance of capital increases with time. - Francis and Schipper (1999) also report that, as the period elapsed, the value relevance of profits decreased, while the value relevance of book value of equity. - In Korea, Lee (2009) argues that the value relevance of accounting information after the financial crisis of 1997 has increased compared to before.. - Previous research that analyzes whether the value relevance of accounting information has changed has argued that the value relevance of accounting information is changing because the accounting system does not adequately reflect changes in the environment. - Therefore, it can be assumed that the value relevance of accounting information will vary depending on the components of assets.. - This study analyzes whether there is a difference in the value relevance of accounting information according to the asset composition, which is information on the balance sheet. - Although there are prior studies analyzing the difference in the value relevance of accounting information according to stability, represented by the debt ratio, there is few studies analyzing the difference in the value relevance of accounting information according to asset elements in the balance sheet.. - Through this analysis, this study verifies how the value relevance of asset elements varies depending on the nature of the firm.. - Over the past several decades, much research has been conducted on the value relevance of accounting information. - However, most of these studies have focused on analyzing the value relevance of profitability and performance variables on the income statement and the cash flow statement. - However, there is little analysis of the value relevance of accumulated asset elements on the balance sheet. - In this section, this paper reviews some of the major studies on the value relevance of accounting information so far.. - First, Easton and Harris (1991) analyze whether accounting earning and book value have complementary value relevance. - This is because the value relevance of accounting earnings has decreased. - The explanatory power of the book value on the balance sheet has increased rather than the decrease in the value relevance of accounting information due to changes in the industrial environment.. - Lobo (2000) report that the intangible asset value reported in the balance sheet is related to the enterprise value. - Hand (2001a) focused on the biotechnology industry and analyzed the value relevance of R&D investment, the growth rate of R&D investment, the size of R&D investment, the value of human assets, and the history of the company. - According to their research results, in the case of non-information and telecommunication companies, only the development cost information processed by the assets showed value relevance. - Baek (2003) analyzes the industry-specific differences in the value relevance of R&D expenditures.. - Baek and Jeong (2004) analyze the effect of capitalization of intangible asset expenditures on the value relevance of these expenditures. - As a result of analyzing the relationship between intangible assets and other items in the balance sheet, Jung et al. - However, per the detailed analysis of intangible assets, it is reported that there is a difference in enterprise value relevance by item.. - Additionally, they report empirical results that the value relevance of accounting earnings and book value differs depending on the size of the firm and the debt ratio.. - Kim, et al., (2006) analyze the value relevance of tangible assets, investment assets, and intangible assets in listed manufacturing industries. - Kim et al., (2009) analyze the value relevance of accounting information, focusing on the asset composition ratio of the balance sheet among the financial characteristics of publicly traded manufacturing companies. - The purpose of this study is to analyze the value relevance of asset elements, which has been neglected in the valuation research sector so far. - This study divides the components of assets into current assets, noncurrent assets, quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets and analyzes the value relevance of each asset element. - H1: The current assets are significantly related to the enterprise value in the Korean capital market.. - H2: The noncurrent assets are significantly related to the enterprise value in the Korean capital market.. - H3: The quick current assets are significantly related to the enterprise value in the Korean capital market.. - H6: The intangible assets are significantly related to the enterprise value in the Korean capital market.. - H8: The other noncurrent assets are significantly related to the enterprise value in the Korean capital market.. - This study uses the Olson (1995) valuation model to analyze the value relevance of asset elements, such as current assets, noncurrent assets, quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets. - To analyze the value relevance of asset elements, this study modifies the Olson (1995) model as follows and verifies the hypothesis of this study.. - Here, MV i,t =market value of equity 3 months after in year t, L i,t =book value of liability in the end of year t. - CU i,t =book value of currents assets in the end of year t. - NCU i,t =book value of noncurrent assets in the end of year t. - ONCU i,t =book value of other noncurrent assets in the end of year t. - QU i,t =book value of quick currents assets in the end of year t. - IN i,t =book value of inventory in the end of year t. - TA i,t =book value of tangible assets in the end of year t. - INTA i,t =book value of intangible assets in the end of year t;. - INV i,t = book value of investment assets in the end of year t. - MV i,t =market value of equity 3 months after in year t, L i,t =book value of liability in the end of year t. - INTA i,t =book value of intangible assets in the end of year t. - INV i,t =book value of investment assets in the end of year t. - 4.2.3 Tests on the Value Influence of Book Value and Performance Variables: Model Before testing the impact of asset elements on business value, this study examines the influence of performance variables such as net income, operating income, cash flows, and operating cash flows in listed Korean Stock Markets over the period of 2000-2015. - The Value Influence of Book Value and Performance Variables. - 4.2.4 Tests on the Value Influence of Asset elements: Current and Noncurrent assets. - This study investigates the value influence of asset elements such as current and noncurrent assets.. - In all of the analytical models 5 through 8, current assets show higher value relevance than noncurrent assets. - In addition, current assets also show higher value relevance than accounting earnings, operating income, cash flows, and operating cash flows.. - The value influence of current and noncurrent assets: Total sample. - Table 8 shows the results of analyzing the relationship between the value of current assets and the value of noncurrent assets according to the stock market (KOSPI vs. - In particular, current assets have a higher impact on firm value than noncurrent assets in both the KOSPI and KOSDAQ groups, and show higher value relevance than performance variables such as accounting earnings, operating income, cash flows and operating cash flows.. - The value influence of current and noncurrent assets: KOSPI vs. - Table 9 shows the results of analyzing the corporate value relevance of current assets and noncurrent assets by the size of the firm (Big vs. - Medium company groups, and show higher value relevance than performance variables such as accounting earnings, operating income, cash flows and operating cash flows.. - The value influence of current and noncurrent assets: Big firm vs. - Table 10 shows the results of analyzing the corporate value relevance of current assets and noncurrent assets by company’s technology level (High technology vs. - In particular, current assets have a higher impact on corporate value than noncurrent assets in both high technology and low technology groups, showing higher value relevance than accounting variables such as accounting earnings, operating income, cash flows and operating cash flows.. - The value influence of current and noncurrent assets: High-Tech firm vs. - 4.2.4 Tests on the Value Influence of Current and Noncurrent Asset elements: Quick current assets, Inventory Assets, Tangible Assets, Intangible Assets, Investment Assets, Other Noncurrent Assets. - This paper examines the value influence of asset elements such as quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets. - The value influence of quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets: Total sample. - Table 12 shows the results of analyzing the corporate value relevance of the quick current assets, the inventory assets, the tangible assets, the intangible assets, the investment assets, and other noncurrent assets according to the stock market (KOSPI vs. - other assets in both the KOSPI and KOSDAQ groups and show higher value relevance than performance variables such as accounting earnings, operating income, cash flows and operating cash flows.. - In the KOSPI group, intangible assets have the largest effect on firm value, followed by other noncurrent assets, quick current assets, investment assets, tangible assets, and inventory assets. - The value influence of quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets: KOSPI vs. - Table 13 shows the results of analyzing the firm value relevance of the quick current assets, the inventory assets, the tangible assets, the intangible assets, the investment assets, and other noncurrent assets according to the firm size (Big firm vs. - Medium firm group, and show higher value relevance than the performance variables accounting earnings, operating income, cash flows and operating cash flows.. - In the Big firm group, the effect of intangible assets on firm value is the largest, followed by quick current assets, other noncurrent assets, inventory assets, tangible assets, and investment assets. - The value influence of quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets: Big firm vs. - In particular, intangible assets have the highest impact on corporate value among other assets components in both the high technology group and the low technology group, and show higher value relevance than the performance variables accounting earnings, operating income, cash flows, and operating cash flows.. - In the high technology group, intangible assets have the largest effect on firm value, followed by quick current assets, other noncurrent assets, tangible assets, and investment assets, and inventory assets. - The value influence of quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets: High-Tech firm vs. - Comparison of the value influence of current assets and noncurrent assets in every sample group. - Comparative value relevance degree: ①>②. - As Table 16 shows, intangible assets have the highest value relevance among assets components in both the total sample and the subgroup samples. - Quick current assets have the second highest value relevance among the asset elements except for the KOSPI group. - In addition, other noncurrent assets have the third highest value relevance except KOSDAQ and Low-Tech group. - Comparison of the value influence of quick current assets, inventory assets, tangible assets, intangible assets, investment assets, and other noncurrent assets in every sample group Sample Group Quick. - Comparative value relevance degree: ①>②>③>④>⑤>⑥. - This study uses the Ohlson (1995) valuation model to examine the main components of assets in the balance sheet: current assets, noncurrent assets, quick current assets, inventories, tangible assets, intangible assets, investment assets, and other noncurrent assets to verify whether there is a significant relationship with the firm value. - In particular, this study divides the sample of companies according to the stock market, firm size, and technology level, and try to verify the difference in the value relevance of asset elements depending on the characteristics of the company.. - The analysis shows that intangible assets have the highest value relevance in both the overall sample and the subgroup sample. - Quick current assets have the second highest value relevance among asset elements except the KOSPI group. - Surprisingly, other noncurrent assets have the third highest value relevance except for the KOSDAQ and Low-Tech groups. - Use of R2 in accounting research: measuring changes in value relevance over the last four decades, Journal of Accounting &. - Different value relevance of R&D accounting information among industries, Korean Management Review . - Has the usefulness of accounting earnings information improved in the Korean stock markets?. - A study on the effect of ownership structure on the value relevance of R&D, Korea International Accounting Review . - A study on the effects of the component ratio of assets on the value-relevance of accounting information, Korea International Accounting Review . - Empirical analysis on the value relevance of accounting earnings and book value according to the firm size and debt ratio, Journal of Taxation and Accounting . - A study on the change in value-relevance of accounting information before and after 1997 financial crisis, Journal of Taxation and Accounting
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