THREE ESSAYS ON THE RELEVANCE OF ACCOUNTING NUMBERS FOR FINANCIAL MARKETS

We analyze the relevance of accounting information for two main financial markets participants: practitioners that use earnings to value public companies, and investors that use earnings to revise their expectations about the future of those companies and, ultimately, to niodify the composition of their portfolios. The thesis is structured into three essays. The first one is a synthesis of the literature focusing on the use of accounting earnings by investors, especially the price-to-earnings ratio to value public companies. The second essay investigates the relationship between the accounting standards used and the implementation of comparable methods. We try to determine whether more comparability related to the mandatory adoption of the international financial reporting standards (IFRS) impacts professionals' valuation practices, especially in terms of peers' selection. Finally, the third essay investigates the relation between firm-specific corporate governance and the credibility of earnings announcements in Europe. We highlight that audit committees might substitute for weak investors protection and, therefore, increase the credibility of earnings