Boyoung Moon

Type of the article: Research Article

Abstract
This study examines whether the value relevance of accounting information has changed in the post-pandemic “New Normal” era, in light of evolving business models and greater reliance on intangible assets. The study analyzes firms listed on the Korean Stock Exchange from 2013 to 2023, defining the period from 2020 to 2023 as the New Normal period. A total of 5,007 firm-year observations from the post-2020 period are used to assess whether traditional financial metrics remain effective in capturing firm value under the new economic conditions. Following Ohlson (1995), a firm’s value is estimated using a linear combination of book value (BPS) and earnings (EPS). Additionally, 1,688 firm-year observations from the information technology (IT) sector are separately examined, given the sector’s strong adaptability and emphasis on digital innovation. The empirical analysis reveals that the explanatory power of the Ohlson model declined from 0.501 to 0.382 in the post-COVID period. Furthermore, the coefficients of both EPS and BPS decreased significantly after the pandemic (coef = –3.574, t-value= –11.29; coef = –0.244, t-value= –9.84). This trend is particularly pronounced in the IT sector (coef = –4.654, t-value= –4.54; coef = –1.103, t-value= –8.45). This indicates that the value relevance of earnings and book value decreased during the New Normal era. These findings highlight the limitations of traditional reporting frameworks and the growing importance of incorporating nonfinancial information into corporate disclosures.