The Relationship of Earnings and Book Values to Equity Values: Evidence from Turkey - Economic Research Forum (ERF)

In this study, we examine factors associated with equity valuation in a newly emerging market, Turkey.  In the United States and other developed countries, research indicates that both earnings and book value are important predictors of equity valuation. In Turkey, earnings appear to have information content, but earnings appear to be declining in importance over time. Book value adjusted for inflation has a stronger association with equity values. In the inflationary and risky environment of Turkey, where future value of earnings is quite uncertain, investors may be paying less attention to earnings. Our study also indicates that, overall, earnings and inflation-adjusted book values combined virtually explain almost 75 percent of the variation in equity prices. This is much higher than results using U.S. data where the maximum R2 for pooled data is 15 percent.

Asokan Anandarajan


Research Fellows

Ihsan Isik

Full Professor of Finance, Rowan University


Ebru Isik


Project

EVENTS

There are no Events PAST



Related Publications

Working Papers

The Division of Ownership and Control in Listed Jordanian Firms

Ghada Tayem

Firms listed on the Amman Stock Exchange (ASE) represent an important part of the economic ... read more


Working Papers

UAE Banks’ Performance and the Oil Price Shock: Indicators for Conventional and Islamic Banks

Magda Kandil and Minko Markovski

This study attempts to identify whether the oil price fall to a “new normal” in ... read more


Working Papers

Are the Credit Rating Agencies Biased Against MENA Countries?

A. Talha Yalta and Yasemin Yalta

We investigate the claims on regional biases in the sovereign credit ratings assigned by Fitch ... read more