Investment property, cost model, fair value model and value relevenve: Evidence from Malaysia

• Published in: International Journal of Financial Research
• Main Author: Kadri M.H.; Amin J.M.; Bakar Z.A.
• Format: Article
• Language: English
• Published: Sciedu Press 2020
• Online Access: https://www.scopus.com/inward/record.uri?eid=2-s2.0-85088802113&doi=10.5430%2fijfr.v11n3p115&partnerID=40&md5=9cd68157c72bbdf75997decd17ea8c0f

The piupose of the study is to investigate the value relevance of investment property of Malaysian listed firms based on cost model and fair value model for measuring their investment properties. Some studies suggested fail* value model is more value relevant and some other studies suggested cost model is more value relevant. The sample was selected using a simple random sampling so that all listed firms have equal chance to be selected. A final sample of 108 firm-year from various industries was selected for a period from 2018 to 2019. Equity valuation models developed by Landsman (1986) and Ohlson (1995) were used to test the value relevance of investment property employed by listed firms in Malaysia. The models were used to test the value relevant of pooled sample, fail* value sample and cost sample. The results show that firms1 investment properties are value relevant regardless whether cost model or fail* value model was selected. It was also found that depreciation included in cost model and fan value gain or loss included in fail* value model net profits are value relevant. The study implicates that cost model is more value relevant in measuring investment property. The result provides useful insight to standard setter about the effect of selection of fail* value model and cost model towards share market value. Standard setters, researchers and academics would benefit from this as prior research in Malaysia suggests that investment properties (in general) are not value relevant even though investment properties of property companies are value relevant. © 2020, Sciedu Press.