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Value relevance of proportionate consolidation versus the equity method: Evidence from Hong Kong
Stella So1; Kar Shun Wong1; Feida (Frank) Zhang2; Xu Zhang3
2018-12
Source PublicationChina Journal of Accounting Research
ABS Journal Level2
ISSN1755-3091
Volume11Issue:4Pages:255-278
Abstract

Whether proportionate consolidation (PC) or the equity method (EM) provides more informative financial statements is a controversial issue. This study uses data from listed companies in Hong Kong to investigate the value relevance of the EM compared with PC during 2005–2008 when the local word-for-word equivalent HKAS 31 offered the same options. The results of this study provide evidence that PC does not offer higher value relevance than the EM. PC's horizontal aggregation of a portion of the operations, assets and liabilities of the jointly controlled entities with those of the venturer is less informative to investors than the EM's vertical aggregation.

KeywordValue Relevance Proportional Consolidation Method Equity Method Financial Statements
DOIhttps://doi.org/10.1016/j.cjar.2018.06.002
URLView the original
Language英语
WOS Research AreaBusiness & Economics
WOS SubjectBusiness, Finance
WOS IDWOS:000450370200001
PublisherELSEVIER SCIENCE BV, PO BOX 211, 1000 AE AMSTERDAM, NETHERLANDS
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Cited Times [WOS]:0   [WOS Record]     [Related Records in WOS]
Document TypeJournal article
CollectionFaculty of Business Administration
DEPARTMENT OF ACCOUNTING AND INFORMATION MANAGEMENT
Corresponding AuthorFeida (Frank) Zhang
Affiliation1.Department of Accountancy and Law, Hong Kong Baptist University, Hong Kong, China
2.Business School, University of Queensland, Australia
3.Department of Accounting and Information Management, University of Macau, Macau, China
Recommended Citation
GB/T 7714
Stella So,Kar Shun Wong,Feida ,et al. Value relevance of proportionate consolidation versus the equity method: Evidence from Hong Kong[J]. China Journal of Accounting Research,2018,11(4):255-278.
APA Stella So,Kar Shun Wong,Feida ,&Xu Zhang.(2018).Value relevance of proportionate consolidation versus the equity method: Evidence from Hong Kong.China Journal of Accounting Research,11(4),255-278.
MLA Stella So,et al."Value relevance of proportionate consolidation versus the equity method: Evidence from Hong Kong".China Journal of Accounting Research 11.4(2018):255-278.
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