Evidence on Competitive Advantage and Superior Stock Market Performance

This article analyzes the value-relevance of industry-based and resource-based competitive advantage in a large sample of firms listed on the Oslo Stock Exchange. We measure competitive advantage by a single variable and perform a new decomposition into its underlying sources. In 1986-2005, the industry-based and the resource-based competitive advantage explain more than 20% of abnormal stock market returns, accumulated over five years. The resource-based advantage is almost four times more important than the industry-based advantage. Differences in both the return and the risk capability of firms’ net assets relative to their industry peers are significant parts of the resource-based advantage, estimated at 60% and 40%, respectively.Competitive advantage; superior performance; value-relevance of performance metrics

The Value-Relevance of Adopting IFRS: Evidence from 145 NGAAP Restatements

Firms listed on stock exchanges within the European Economic Area are required to report consolidated financial statements according to IFRS from 2005. The firms that adopted IFRS in 2005 were also required to restate their 2004 financial statements from national GAAP to provide comparable accounting figures. These two sets of financial statements for 2004 are thus based on identical underlying economic activities and are fully specified according to two different reporting regimes. Our sample consists of 145 restatements from NGAAP to IFRS for firms listed on the Oslo Stock Exchange in Norway. We test whether the IFRS accounting figures correlate more strongly with stock market values than the corresponding NGAAP figures. We find little evidence of increased value-relevance after adopting IFRS when comparing and evaluating the two regimes unconditionally. On the other hand, when evaluating the change in the accounting figures from NGAAP to IFRS, we find evidence that the reconcilement adjustments to IFRS are marginally value-relevant due to increased relevance of the balance sheet and the normalized net operating income. By weighting our sample by firm size, intangible asset intensity and profitability, we learn that the increased value-relevance of the net operating income stems from different reporting of intangible assets. Since more intangible assets are capitalized according to IFRS than NGAAP, our finding is consistent with the view that capitalizing intangible assets is more value-relevant than expensing them as incurred or through goodwill amortization.Value-relevance of reporting standards; IFRS versus NGAAP; accounting harmonization; balance sheet-oriented conceptual frameworks versus earningsoriented conceptual frameworks

Market efficiency in Scandinavian racetrack betting

This study analyzes Scandinavian racetrack betting markets. We discuss market efficiency and investor behavior in light of the fact that investors earn negative returns on average. Show bets on favorites in Norway yield a small positive return, while all the other betting markets are weak form efficient. We establish the favorite-longshot bias for quinella and exactor bettors, but not for win bettors. Our results can be explained by small pools and high track takes. Investors wagering at the racetrack have a different risk attitude than investors wagering off the track. We explain how our results should influence the design of betting products, especially with respect to the fraction of the pool returned to winners.Market efficiency racetrack betting investor behavior risk attitude betting products

Tidligpensjonering som familiebeslutning

Denne oppgaven ser på hvilke individuelle og bedriftsspesifikke variabler som er med å påvirke tidligpensjoneringsbeslutningen og hvor sterke disse effektene er. Det vil også bli lagt særlig vekt på hvilken rolle familien har i avgjørelsen om eventuelt å gå av med tidligpensjon. Analyseutvalget som benyttes i oppgaven, består av 56764 individer født i årene 1929-1932. Individene i utvalget følges i perioden 1992 til 1997 og kan havne i fire ulike kategorier. Det er tre kategorier for tidligpensjon i tillegg til det fremdeles å være i arbeid. I analysen brukes programmet STATA.Analysen viser at kvinner og menn reagerer noe ulikt på ektefellens inntektsnivå. Kvinner vil, mer enn menn, kompensere for mannens atferd og tilpasse seg mannens behov. Kvinner vil også i større grad enn menn velge å gå av med tidligpensjon hvis den økonomiske situasjonen gjør dette mulig. Det ser ut til at menn tar beslutningen om eventuelt å tidligpensjonere seg basert på individuelle og bedriftsspesifikke variabler, og ikke i like stor grad ektefellens atferd

The value-relevance of adopting IFRS : evidence from 145 NGAAP restatements

Firms listed on stock exchanges within the European Economic Area are required to report consolidated financial statements according to IFRS from 2005. The firms that adopted IFRS in 2005 were also required to restate their 2004 financial statements from national GAAP to provide comparable accounting figures. These two sets of financial statements for 2004 are thus based on identical underlying economic activities and are fully specified according to two different reporting regimes. Our sample consists of 145 restatements from NGAAP to IFRS for firms listed on the Oslo Stock Exchange in Norway. We test whether the IFRS accounting figures correlate more strongly with stock market values than the corresponding NGAAP figures. We find little evidence of increased value-relevance after adopting IFRS when comparing and evaluating the two regimes unconditionally. On the other hand, when evaluating the change in the accounting figures from NGAAP to IFRS, we find evidence that the reconcilement adjustments to IFRS are marginally value-relevant due to increased relevance of the balance sheet and the normalized net operating income. By weighting our sample by firm size, intangible asset intensity and profitability, we learn that the increased value-relevance of the net operating income stems from different reporting of intangible assets. Since more intangible assets are capitalized according to IFRS than NGAAP, our finding is consistent with the view that capitalizing intangible assets is more value-relevant than expensing them as incurred or through goodwill amortization

The value relevance of financial reporting on the Oslo Stock Exchange over the period 1964-2003

This article focuses on the value relevance of financial statements in Norway over the 40-year period from 1964 to 2003. Since Norwegian generally accepted accounting principles are based on an earnings-oriented conceptual view rather than a balance-oriented conceptual framework, like the ones adopted by the IASB and the FASB, this study provides interesting empirical evidence on the value relevance of earnings-oriented conceptual frameworks. Our main finding is that the value relevance of financial reporting for investors trading on the Oslo Stock Exchange has increased significantly over the past four decades. This result is obtained by evaluating the adjusted R2-metric from a stock market return regression over time using deflated earnings and deflated change in earnings as explanatory variables, and controlling for changes in underlying economic variables over the period. A significant time trend is consistent with the view that Norwegian accounting regulators and standard setters have been successful in achieving more value relevant financial statements over time. Norway is an example where employing an earnings-oriented conceptual framework has improved the value relevance of accounting information

Evidence on competitive advantage and superior stock market performance

This article analyzes the value-relevance of industry-based and resource-based competitive advantage in a large sample of firms listed on the Oslo Stock Exchange. We measure competitive advantage by a single variable and perform a new decomposition into its underlying sources. In 1986-2005, the industry-based and the resource-based competitive advantage explain more than 20% of abnormal stock market returns, accumulated over five years. The resource-based advantage is almost four times more important than the industry-based advantage. Differences in both the return and the risk capability of firms’ net assets relative to their industry peers are significant parts of the resource-based advantage, estimated at 60% and 40%, respectively

Real cost reductions in Norwegian manufacturing and service industries

Økt produktivitet er typisk en konsekvens av å implementere nye produksjonsmetoder og/eller nye organisasjons-, markedsførings- og styringssystemer i en bedrift. I den senere tid har fokus i større grad vært rettet mot immaterielle aktivas betydning for teknologisk forbedring. Goldfinger (1997) hevder at kilden til økonomisk verdiskapning ikke lenger er produksjon av materielle, fysiske varer, men snarere å skape og få immaterielle, ikke-fysiske enheter til å fungere. Følgelig kan en forvente at sektorer med en stor andel av immaterielle aktiva viser større produktivitetsforbedringer enn sektorer med en liten andel. Denne rapporten forsøker å kaste lys over denne problemstillingen ved å estimere produktivitetsforbedringer for et meget stort utvalg norske selskaper for perioden fra 1991 til 1997. Vi har tilgang til en meget omfattende database, som inneholder regnskapsdata fra Brønnøysundregistrene for alle norske selskaper. Vi benytter et dualt mål på teknologisk endring, hvilket betyr at grunnlaget for beregningene er reduksjon i realverdien av de totale kostnadene. Vi finner at norske selskaper har fungert kostnadseffektivt i analyseperioden. Industri-selskapene kan vise til en gjennomsnittlig årlig produktivitetsforbedring på ca. 0,35%, mens selskapene i servicesektoren kan vise til en forbedring på ca. 0,73%. Denne forskjellen er klart statistisk signifikant. Siden servicesektoren har et større innslag av immaterielle aktiva, støtter denne observasjonen oppfatningen om disse aktivenes økte betydning for teknologisk fremgang. Innenfor industrisektoren finner vi at produktivitetsforbedringen har vært ikke-signifikant i konkurranseskjermet del (matvareproduksjon) og signifikant negativ for kategorien maskiner og utstyr. Gitt at immaterielle aktiva i nyere tid betyr mer for produktiviteten enn materielle, er det rimelig å anta at den teknologiske forbedringen er høyere i sterkt kunnskapsbaserte sektorer av økonomien. Vi finner støtte for dette synet ved at selskapenes grad av arbeidsintensitivitet korrelerer signifikant positivt med vårt produktivitetsmål