Investigation of Market Values and Accounting Numbers : The relationship between market values and accounting numbers for Australian firms

This study seeks to resolve a gap in the Capital Markets research literature by examining 30 selected individual firms listed on the Australian stock market during the period 1950 to 2004, using equilibrium correction modelling techniques. What little research has been conducted on this historical data has used cross-sectional techniques rather than the long-run, time-series, analysis as used in this study. Moreover, dynamic analysis in the CMR has tended to focus on indexes or portfolio data rather than using firm-specific case study data of the type modelled here. No prior research has taken this approach using Australian data. The results of this study indicated that an equilibrium correction relationship between market values and accounting numbers for firms listed on the Australian Stock Exchange (ASX) could be determined by using accounting and macroeconomic regressors.