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Why Accounting Does Not Matter Like It Once Did: Valuation Difficulties And Autonomous
Speculation On Wall Street
Abdulmalik Al - Hogail, Al Faisaliah Group
Timothy J. Fogarty, Case Western Reserve University
ABSTRACT. Financial Accounting research is predicated on the assumption that the information captured by accounting measurement underlies equity valuation. This study questions that belief by documenting an accounting measurement effect wherein financial reporting fails to capture economic value, and an investor behavior effect when trading is based on non-accounting factors. These effects combine to form the demonstration of a long-term decline in value relevance for accounting information.
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