Changes in the Value Relevance of Financial Accounting Information: Evidence from Nordic Capital Markets Before, During and After COVID-19 : -

Sammanfattning

Value relevance studies focus on how accounting information is reflected in stock prices. Previous research indicates that there is not a consistent accounting–price relationship over time and that it can vary in economic uncertainty. This study examines the value relevance of the earnings per share (EPS) and book value per share (BVPS) change in Nordic capital markets during the preCOVID period (2017–2019), the COVID-19 period (2020–2021) and the post-COVID period (2022–2024). To analyze the changes in the valuation coefficients between the three periods, the study is grounded on the Ohlson (1995) valuation framework and employs a fixed effects panel regression model with interaction terms. The sample comprises 308 non-financial companies listed on Nasdaq Stockholm, Nasdaq Copenhagen, Nasdaq Helsinki and Oslo Børs with 2,464 firm-year observations. The results indicate that BVPS is the most significant factor contributing to the stock prices before the COVID-19 period, while EPS is not significant. However, in contrast to initial expectations, both EPS and BVPS became more value relevant at the same time in the middle of and after COVID-19 period. This contradicts the substitution argument of Collins et al. (1997) and not necessarily the general weakening argument of Dontoh et al. (2004). Instead, the findings suggest that investors used earnings and book value as complementary sources of information rather than substitutes. EPS appeared to signal firm resilience and recovery potential while BVPS provided information about financial stability. The study provides new evidence for the Nordic capital markets and implies that value relevance is not fixed but rather adapts to changes in the economic environment.