This paper tests whether revaluations of fixed assets by U.K. firms are associated with changes in firms’ underlying economic fundamentals. We find, as predicted, that upwards fixed asset revaluations under U.K. GAAP are significantly positively related to future firm performance. Also, current year revaluations (revaluation balances) are significantly positively related to contemportaneous stock returns (prices). These findings indicated revaluation amounts reliablymeasure changes in asset values. Revaluations before 1990 are more strongly associated with future performance and returns than those after 1990, suggesting the reduction in management discretion embodied in 1990 proposed accounting changes reduced the reliability of revaluation amounts. Negative revaluations also are significantly positively related to returns, but relatively small (large) negative revaluations are generally insignificantly (significantly negatively) related to future performance.