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Corporations' management of their financial statements are evaluated, focusing on their reporting of dividend taxation and its impact on corporate valuation. The authors conclude that omitting dividend taxes from balance sheets overstate retained earnings while understating liabilities.

Firms that are not registered in the US but are listed on a major US exchange are required to reconcile their reported earnings and shareholders' equity to the generally accepted accounting practices (GAAP) of the US to file their Form 20-F. These reconciliations are studied to evaluate the value-relevance of separate accounting measurement systems. Results show that the aggregate reconciliations of both the equity and earnings of the shareholders are value-relevant. Investors perceive capitalized goodwill, asset revaluations and taxation adjustments as being value-relevant. However, these results should not be used to justify the usefulness of the 20-F reconciliations as imposed by the SEC. Investors may also derive value-relevant data from reports that are released in the home country. Moreover, the US GAAP appears to be less relevant when the asset revaluations are removed. This means that 20-F reconciliations are not that important and thus should not be required.

The revaluation practices of 100 Australian firms over a ten-year period from 1981 were examined to discover the relationship between the revaluations and stock market prices and returns. For the study, published financial reports of the firms were investigated, follow-up interviews with executive financial officers were conducted, and association tests between accounting data and stock market measures were performed. Results show that book values that incorporate asset revaluation reserves are more descriptive of the firm's market value than those that do not include asset revaluations. Also, findings suggest that the balance in the asset revaluation reserve, unlike the net increment, is descriptive of cross-sectional variation in price-to-book ratios. When change in debt levels is relatively high or when the balance in the asset revaluation reserve is relatively high, the revaluation increment is more aligned with changes in basic asset values.

A model based on the premise that owners' equity and market value are variables that reveal equity holders' wealth was used to investigate whether earnings can display explanatory power for evaluating returns. The model, after adjusting for dividends, used as flow variables market returns and beginning-of-return-period earnings divided by price. Research results revealed that the earnings divided by the price at the beginning of the period was positively correlated with stock returns.

The efficacy of geographically segmented (GEOG) data in providing predictive information on the earnings process was analyzed. Previous research has ignored GEOG disclosures and concentrated on line-of-business (LOB) segment reports. Research into the predictive ability of GEOG disclosures is particularly relevant since the SEC is considering requiring LOB and GEOG disclosures in all interim financial statements. Research results indicated that GEOG data offers predictive ability for annual income and sales.

A comparison is made between the value relevance of German and American accounting measures matched on industry and firm size. The study also analyses the incremental explanatory power of earnings data for German companies adjusted on the basis of a formula developed by the German financial analyst society DVFA. Results show that accounting data are as meaningful for German companies as for US companies. It is found that the informativeness of earnings for returns in Germany and in the US is comparable, although the informativeness of shareholder's equity for price is greater in the US. Additionaly, findings indicate that the coefficients showing the relationship between stock price return/level and a given level of earnings or shareholders' equity tend to be larger in Germany than in the US even though the informativeness of regressions for American firms is greater than that of regressions for their German counterparts.

Links between taxation of dividends, stock prices, and the cost of capital are examined in detail. The focus is on the US, with some comparisons made with other countries.