Equity and Cost Methods in Reported Earnings: The Case of Thai Listed Firms

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Prawat Benyasrisawat
Rob Dixon
Kandawan Kaewphap
Uncharlee Virunjanva


This research examines the property of earnings which are reported by Thai listed firms through the equity and cost methods. The property of earnings is examined in terms of the persistence and value-relevance of earnings information. In the persistence of earnings information, the change model is employed for the main analysis. Results show that earnings information which is prepared through the equity method is more persistent and more value-relevant than that prepared through using the cost method. The outcome of this research provides the Thai accounting authority with empirical evidence which suggests that the equity method earnings are of higher quality than the cost method earnings. Further, the findings also reveal that the latter provides opportunities to firms to manage their earnings.
Keywords: Earnings Management, Earnings Persistence, IFRS, Thailand, Value Relevance
JEL Classification: M41


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