Value Added Reporting and Research: State of the Art

Value Added Reporting and Research: State of the Art

Value Added Reporting and Research: State of the Art

Value Added Reporting and Research: State of the Art

Synopsis

It is clear that value added methods provide relevant, useful information for financial analysis, market valuation, and financial decision making in corporate settings. Value added methods can be used in ratio analysis, in the determination of earnings as an earnings management tools, and can be substituted for earnings in equity valuation. When included in a wealth measurement it can vastly improve the quality of decision making. Riahi-Belkaoui covers these topics and more. His book is a probing, essential examination of what the latest value added methods are and what they can do, not only for accounting professionals but for academics and top corporate management as well.

Excerpt

Value added reporting has achieved better recognition in both practice and research. In practice, it is a popular form of reporting for most innovative foreign multinationals and is a mandatory form of reporting in most European countries and in New Zealand, South Africa, and Australia. Most of the emerging countries are either using value added reporting or considering it. In research, value added reporting has been examined in the United States in terms of its relevance to capital market research and predictive ability research. This book explicates these developments in practice and research before examining its merits both for earnings determination and for inclusion in market valuation models in general and the Feltham and Ohlson's model in particular. This book includes six chapters that are complemented by appendices covering my "published research" on the subjects. Portions of this book were previously published in Performance Results in Value Added Reporting. The six chapters are as follows.

Chapter 1, entitled "The Story behind Value Added Reporting," covers the meaning of the concept, the history behind its development, and its implied advantages and disadvantages.

Chapter 2, entitled "Adopting and Using Value Added Information," covers the derivation of a value added report using a fictional case and use of the resulting data for financial analysis.

Chapter 3, entitled "Usefulness of Value Added Reporting: A Review and Synthesis of the Literature," provides an overview of the empirical literature, which has generally focused on the benefits and limitations of value added reporting in the U.S. context from three perspectives: (1) value-added-base . . .

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