The Value Relevance of Accounting Information During a Financial Crisis: Thailand and the 1997 Decline in the Value of the Baht

Posted: 5 Sep 2000

See all articles by Roger C. Graham

Roger C. Graham

Oregon State University

Jack C. Bailes

Oregon State University - College of Business

Raymond D. King

University of Oregon - Department of Accounting

Abstract

This study addresses whether the financial turmoil surrounding the devaluation of the baht affected the value relevance of Thai accounting information. Our results suggest a decline in the value relevance of Thai book values and earnings following the devaluation. Prior to mid 1997 the Bank of Thailand pegged the value of the baht to a basket of currencies of which 80 percent was weighted to the US dollar. In response to pressure by currency speculators the bank abandoned its peg on July 2 1997 in favor of a managed float. The devaluation was followed by volatile exchange rates. The change in value relevance of accounting information after the devaluation may be attributable to the initial recognition of foreign exchange losses and the subsequent recognition of foreign exchange gains as exchange rates fell and then recovered.

JEL Classification: M41, M47

Suggested Citation

Graham, Roger C. and Bailes, Jack C. and King, Raymond D., The Value Relevance of Accounting Information During a Financial Crisis: Thailand and the 1997 Decline in the Value of the Baht. Available at SSRN: https://ssrn.com/abstract=234329

Roger C. Graham (Contact Author)

Oregon State University ( email )

424 Austen Hall
Corvallis, OR 97331
United States
541-737-4028 (Phone)
541-737-4890 (Fax)

Jack C. Bailes

Oregon State University - College of Business ( email )

Corvallis, OR 97331
United States
541-737 2517 (Phone)

Raymond D. King

University of Oregon - Department of Accounting ( email )

Lundquist College of Business
1208 University of Oregon
Eugene, OR 97403
United States

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