When do firms revalue their assets upwards? Evidence from the UK

The purpose of this paper is to investigate the timing of upward asset revaluations using large UK data.

A standard logistic model is used to examine the timing of upward asset revaluations. The result is further confirmed by using the ordinary least squares regression.

UK firms with higher industrial leverage and share performance two years before the revaluation year are inclined to write up their assets, suggesting that firms choose not to recognise good news unless it has been supported by their superior market performance and industry norm. This finding differs from the leverage reduction as well as the signalling objective suggested by previous literature.

This paper provides the first UK evidence on the timing of upward asset revaluation, which further enhance the understanding of the economic determinants of upward asset revaluations.