Page 26 - Faculty Research Publication Booklet_Apr 2022_Mar 2023_Final

This study aims to investigate how the intangible intensive nature
Kumari, P., & Mishra, C. S. (2023). Value
relevance of earnings and book value of
equity in profit versus loss reporting firms:
significance of intangible intensity.
Accounting Research Journal.
Page 20
of firms affects the value relevance of earnings and the book
value of equity between profit- and loss-reporting firms. The study
also examines how firms’ intangible intensity affects the value
relevance of R&D outlays between profit- and loss-reporting
firms. An empirical analysis based on Ohlson’s (1995) framework
is used. A total of 54,421 firm-year observations of Indian listed
firms from financial years 1992–2016 constitute the study sample.
The findings suggest that the difference in the value relevance of
earnings and the book value of equity between profit- and loss-
reporting firms is more significant in non-intangible intensive
firms than in intangible firms. Specifically, earnings are more
value relevant in profit-reporting and non-intangible intensive
firms, whereas book value of equity is more value relevant in loss-
reporting and intangible intensive firms. The results also suggest
that the difference in the incremental value relevance of R&D
information between profit- and loss-making firms is higher in
intangible intensive firms than in non-intangible intensive firms.
The findings of this study can help managers, standard-setters
and investors make effective decisions. This study offers insights
into the impact of intangible intensity on the value relevance
of aggregated and disaggregated accounting information
between profit- and loss-making firms in institutional settings
where capitalization of R&D expenditures is allowed.