Original Research

The value and accounting premium for South African-listed shares

Jürgen Ernstberger, Christian Heinze, Oliver Vogler
Journal of Economic and Financial Sciences | Vol 2, No 2 | a354 | DOI: https://doi.org/10.4102/jef.v2i2.354 | © 2018 Jürgen Ernstberger, Christian Heinze, Oliver Vogler | This work is licensed under CC Attribution 4.0
Submitted: 01 July 2018 | Published: 31 October 2008

About the author(s)

Jürgen Ernstberger, Georg-August-University Goettingen, Germany
Christian Heinze, University of Regensburg, Germany
Oliver Vogler, University of Regensburg, Germany

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Abstract

In the last decade, empirical research has found strong evidence that value stocks provide higher returns than growth stocks (value premium). Firms with a high ratio of book value of equity to market value of equity are regarded as value stocks; a low ratio identifies growth stocks. Most research is tailored to the market in the United States of America. Only a few studies consider country-specific distinctions. This research analyses the value premium for the South African market and compares its magnitude to the findings for the US market. Moreover, the effects of the introduction of International Financial Reporting Standards (IFRS) for companies listed at the JSE Limited are examined. The adoption of IFRS is used to demonstrate that investors award an accounting premium for voluntary compliance with this new accounting standard.

Keywords

value premium; accounting premium; South Africa; asset pricing; Fama-French model; multi-factor model

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