Journal of Asian Development
Is Accounting Information Still Relevant in the Internet Age? Research on the Determination of the Effect of Google Trends Data on Earnings Response Coefficient: Case of Vietnam
Abstract
When determining the role of accounting information, earnings response coefficient (ERC) is usually used for discovering the relationship between new earning information and unexpected share returns in relation to the event of releasing financial statements. In the context that most of the firm-related information is now available for investors via Internet platform, this study addresses the question how the public attention of the company through the Internet affects the response of the market to the accounting information releasing, or in other words, how market reaction to the firm’s unexpected earnings is affected by Internet information trends. Using a sample of VN30 baskets of Vietnamese listed firms (excluding the financial institutions) in the Ho Chi Minh Stock Exchange (HOSE) from 2015 to 2018 and the Google trends data from the same period, the study examines investigate the possible relationship between Google trend and the earnings response coefficient. The results from regression indicate that the ERCs of Vietnamese firms is positive and the interest of the firms on the Internet has no significant impact on ERC. The main findings expecting to contribute to providing direct support that the relevance of accounting information are still valuable in the Internet age. This paper is expected to make a contribution to research of accounting information relevance in terms of extending to sample in developing countries like Vietnam.
Full Text:
PDFReferences
An, Y. (2015). Earnings Response Coefficients and Default Risk: Case of Korean Firms. International Journal of Financial Research, 6, 67.https://doi.org/10.5430/ijfr.v6n2p67
Ball, R., & Brown, P. (1968). An Empirical Evaluation of Accounting Income Numbers. Journal of Accounting Research, 6, 159-178. https://doi.org/10.2307/2490232
Bijl, L., Kringhaug, G., Molnár, P., & Sandvik, E. (2016). Google searches and stock returns. International Review of Financial Analysis, 45, 150-156. https://doi.org/10.1016/j.irfa.2016.03.015
Brown, N. C., Stice, H., & White, R. M. (2015). Mobile communication and local information flow: Evidence from distracted driving laws. Journal of Accounting Research, 53(2), 275-329. https://doi.org/10.1111/1475-679X.12077
Bushee, B. J., Core, J. E., Guay, W., & Hamm, S. J. W. (2010). The Role of the Business Press as an Information Intermediary. Journal of Accounting Research, 48, 1-19. https://doi.org/10.1111/j.1475-679X.2009.00357.x
Chi, S., & Shanthikumar, D. (2017). Local Bias in Google Search and the Market Response around Earnings Announcements. The Accounting Review, 92(4), 115-143. https://doi.org/10.2308/accr-51632
Collins, D. W., & Kothari, S. P. (1989). An analysis of intertemporal and cross-sectional determinants of earnings response coefficients. Journal of Accounting and Economics, 11, 143-181. https://doi.org/10.1016/0165-4101(89)90004-9
Dhaliwal, D., Lee, K., & Fargher, N. (2010). The association between unexpected earnings and abnormal security returns in the presence of financial leverage. Contemporary Accounting Research, 8, 20-41. https://doi.org/10.1111/j.1911-3846.1991.tb00832.x
Drake, M. S., Roulstone, D. T., & Thornock, J. R. (2012). Investor Information Demand: Evidence from Google Searches Around Earnings Announcements. Journal of Accounting Research, (4), 1001. https://doi.org/10.1111/j.1475-679X.2012.00443.x
Drake, M., Guest, N., & Twedt, B. (2014). The Media and Mispricing: The Role of the Business Press in the Pricing of Accounting Information. The Accounting Review, 89(5), 1673-1701. https://doi.org/10.2308/accr-50757
Fama, E. F. (1970). Efficient Capital Markets: A Review of Theory and Empirical Work. The Journal of Finance, 25, 383-417. https://doi.org/10.2307/2325486
Hasan, R., Kumas, A., & van der Laan Smith, J. (2018). Market ambiguity and individual investor information demand. Journal of Contemporary Accounting & Economics, 14(1), 126-141. https://doi.org/10.1016/j.jcae.2018.03.001
Meifen CHU (2016). A Comparative Study of Vietnam and China Stock Market. Annual International Conference on Qualitative & Quantitative Economics Research, 56-63. https://doi.org/10.5176/2251-2012_QQE16.36
Roger, K., & Robert, L. (1987). Earnings Innovations, Earnings Persistence, and Stock Returns. The Journal of Business, 60, 323. https://doi.org/10.1086/296400
Scott, W. R. (2015). Financial accounting theory (7th ed.). Pearson Canada.
Shapiro, A. C. (1990). Modern corporate finance. Macmillan.
Xin Xu, S., & Xiaoquan (Michael), Zhang. (2013). Impact of Wikipedia on Market Information Environment: Evidence on Management Disclosure and Investor Reaction. MIS Quarterly, 37(4), 1043-A10. https://doi.org/10.25300/MISQ/2013/37.4.03
Weng, B., Lu, L., Wang, X., Megahed, F. M., & Martinez, W. (2018). Predicting short-term stock prices using ensemble methods and online data sources. Expert Systems with Applications, 112, 258-273. https://doi.org/10.1016/j.eswa.2018.06.016
DOI: https://doi.org/10.5296/jad.v5i3.15924
Refbacks
- There are currently no refbacks.
Copyright (c) 2019 Journal of Asian Development
Journal of Asian Development ISSN 2377-9594 E-mail: jad@macrothink.org
Copyright © Macrothink Institute
To make sure that you can receive messages from us, please add the 'macrothink.org' domains to your e-mail 'safe list'. If you do not receive e-mail in your 'inbox', please check your 'spam' or 'junk' folder.