In the section of this article discussing the accounting diversity across the six
countries, we predicted that the Philippines, Indonesia, and Malaysia would have high
incremental explanatory power for book value with low explanatory power in Taiwan
and Thailand. Our expectation that the explanatory power of book value would be
highest in the Philippines and the lowest in Taiwan is supported. However, the
incremental explanatory power of book value in Indonesia and Malaysia do not stand
out as high.
Focusing on the incremental explanatory power of REPS, Rrjb
2, we find the incremental
power of REPS is much lower than that for BVPS. Furthermore, Rrjb
2 appears more stable
over time. Table 11 lists the highest to lowest incremental explanatory power for REPS for
the samples pooled over all years.
Thailand ranks first (third) in incremental explanatory power for residual earnings
for pooled firm-years (yearly average). The Philippines shows some evidence (yearly