Title: The relationship between competitive advantage and the value relevance of accounting information
Authors: Sang-Lyul Ryu; Jayoun Won
Addresses: College of Business, Konkuk University, 120 Neungdong-ro, Gwangjin-gu, Seoul, 05029, South Korea ' College of Global Business, Korea University, 2511 Sejong-ro, Sejong, 30019, South Korea
Abstract: This study examines the relationship between competitive advantage and the value relevance of accounting information. The advantage that a firm has over its competitors can be defined as its relative efficiency in transforming the performance of key success factors into the firm's profitability. We classify firm-year observations into lifecycle stages and measure the efficiency using data envelopment analysis (DEA) in each of the different lifecycle stages. Our results indicate that the efficiency has a positive relationship with the stock price of a firm and decreases (or increases) the value relevance of book value per share (BPS) (or earnings per share (EPS)). The current study captures a firm's competitive advantage by a single efficiency score and reveals that the efficiency has a positive impact on firm value.
Keywords: competitive advantage; firm lifecycle; DEA; data envelopment analysis; value relevance; accounting information; efficiency.
International Journal of Trade and Global Markets, 2018 Vol.11 No.1/2, pp.118 - 126
Received: 03 Aug 2017
Accepted: 27 Oct 2017
Published online: 21 Jun 2018 *