The objective of financial reporting is to provide information about an entity which is useful to a wide range of users in making economic decisions. This study empirically investigates the utility of inflation accounting data to investors, by examining the ability of this data to explain the share prices of UK listed companies. Previous research supports a relation between historical cost accounting data and share prices from a conceptual and empirical perspective. Prior evidence from studies on the utility of inflation accounting data to investors is mixed. However, many of these suffer from methodological problems which cast doubts on their ability to evaluate the utility of inflation accounting data. This study overcomes some of the problems encountered in earlier studies and incorporates additional research design features. In evaluating inflation accounting data, this study explores whether or not company policy towards the disclosure of inflation accounting data in the premandatory period is associated with the explanatory power of this data. The investigation was undertaken for 2 periods to discover whether or not a learning lag exists in relation to the inflation accounting data. To achieve the objectives of this study, a recently developed cross sectional valuation model was used. The model incorporates measures from both the balance sheet and income statement, which allows the value relevance of key financial report disclosures to be assessed. The analysis reveals evidence supporting the utility of inflation accounting data to investors. The results show that a company's policy towards disclosing inflation accounting data in the premandatory period is associated with the explanatory power of this data. The significance of the inflation accounting data appears to be greater for the companies disclosing inflation accounting data in the premandatory period (Supportive Companies), than for companies which commenced disclosure in the first mandatory period (Reluctant Companies). There is also, evidence showing a differential response to the inflation accounting data for the Supportive and Reluctant Companies. The analysis fails to find any evidence of a learning effect in respect of the inflation accounting data.