A Reevaluation of the Work of William Beaver in 1968
This study evaluates the pivotal work of Beaver (1968) that demonstrated the value and timeliness of financial statements. This paper discusses the original study by Beaver (1968), assesses the literature in the field since 1968, and conducts a study that fills three important gaps in the research area of information content of financial statements. The key test is an analysis of variance (ANOVA) test that compares the trading volume of a firm 30 days prior to an earnings announcement with the trading volume of that firm for 10 days after the announcement. This study concludes that between 61.81% and 64.85% of all firms report financial information that is both timely and valuable. The first research gap that this study fills is the need for ongoing testing of the information content of financial statements as the financial markets and the field of accounting are constantly evolving. This study fills a second gap in the research by explaining variance in the post-announcement drift of individual firms. This study fills a third gap in the literature by providing a percentage estimate of all firms that provide timely and valuable information content. This third contribution may prove to be useful to future research as this classification of firms could be used as a platform to define the characteristics of individual firms that do or do not report financial information that is both timely and valuable.
Authors who publish with this journal agree to the following terms:
- Authors retain copyright and grant the journal right of first publication with the work simultaneously licensed under a Creative Commons Attribution License that allows others to share the work with an acknowledgement of the work's authorship and initial publication in this journal.
- Authors are able to enter into separate, additional contractual arrangements for the non-exclusive distribution of the journal's published version of the work (e.g., post it to an institutional repository or publish it in a book), with an acknowledgement of its initial publication in this journal.
- Authors are permitted and encouraged to post their work online (e.g., in institutional repositories or on their website) prior to and during the submission process, as it can lead to productive exchanges, as well as earlier and greater citation of published work (See The Effect of Open Access).