Firms with more intangible assets are more likely to repurchase shares and have more positive repurchase announcement returns, as predicted. Because intangibles generally are unrecognized, share repurchases represent a potential cost to an incomprehensive accounting model. Idle cash is positively related to repurchase likelihood and negatively related to announcement returns, as predicted. Contrary to predictions, general information asymmetry is negatively related to repurchase likelihood, but announcement returns are positively related, as predicted. Tests include controls for stock option plans, dividends, and book-to-market ratios, which generally are significant as predicted. Using change variables in the repurchase likelihood tests yields consistent inferences.

Earnings Patterns, Increasing Earnings, Valuation

We show harmonizing domestic GAAP with foreign GAAP can have deleterious effects on security market performance, specifically price informativeness and trading volume. Harmonization effects result from interaction between two forces. Direct informational effects depend on whether harmonization increases or decreases GAAP precision. Expertise acquisition effects depend on benefits and costs to foreign investors of becoming domestic GAAP experts. These countervailing forces can result in harmonization to more (less) precise GAAP increasing (decreasing) or, unexpectedly, decreasing (increasing) price informativeness and trading volume. We also observe this for a cost of capital metric. Thus, harmonization is not necessarily a desirable singular goal.

We find, as predicted, that upward revaluations of fixed assets by UK firms are significantly positively related to changes in future performance, measured by operating income and cash from operations, indicating revaluations reflect asset value changes. Current year revaluations (revaluation balances) also are significantly positively related to annual returns (prices). Relations between revaluations and future performance and prices are weaker for higher debt-to-equity ratio firms, indicating motivation affects how revaluations reflect asset value changes. The relations also are weaker for cross-listed firms and in a more volatile economic time period. Our inferences are robust to controlling for firms' acquisition activity.