The association between accounting information and share prices in developing countries: does corruption matter

2021 ◽  
Vol 10 (3) ◽  
pp. 321
Author(s):  
Michael Deterding ◽  
Marius Gros
Keyword(s):  
Developing Countries ◽  
Accounting Information ◽  
Share Prices

Does institutional ownership affect the value relevance of accounting information?

2020 ◽  
Vol 28 (2) ◽  
pp. 323-342
Author(s):  
Mohamed Omran ◽  
Yasean A. Tahat
Keyword(s):  
Value Relevance ◽  
Accounting Information ◽  
Market Value ◽  
Institutional Ownership ◽  
Financial Leverage ◽  
Content Type ◽  
Book Value ◽  
Share Prices ◽  
Listed Firms ◽  
Positive Effects

Purpose Drawing upon agency theory, this study aims to assess the value relevance (VR) of accounting information released by non-financial firms listed on the Kuwait stock exchange for the period of 2015-2018. Also, the influence of institutional ownership level and other explanatory variables, namely, book value per share, earnings per share, growth in assets and changes in financial leverage on share prices is examined. Design/methodology/approach To test the hypotheses, the Ohlson (1995) model is extended. This study uses panel data analysis and applies appropriate statistical techniques to measure empirical relationships. Findings The results show that the VR of accounting information released by the Kuwaiti non-financial listed firms varies over the period of 2015-2018. Book value and earnings have significant and positive effects on share prices. In recent years, the VR of book value information has been growing, while that of earnings information has been declining. Institutional ownership level has a significant and positive influence on the VR of accounting information released by the Kuwaiti non-financial listed firms. The findings confirm a positive power, signalling growth in assets regarding the share prices. However, no significant relationship between changes in financial leverage and share prices is found. Practical implications The findings of the study provide evidence of the linkage between VR and institutional ownership level, which promotes the understanding of the influence of institutional investors on a firm’s market value. Empirical evidence from Kuwait will have international implications and can serve as a guide for accounting researchers studying other emerging markets. Capital market regulators can provide guidelines in the form of information characteristics and elements of financial statements that need improvement. Finally, the findings assist non-financial listed firms to enhance the quality of accounting information by identifying the strengths and weaknesses in their financial reports. Originality/value This study extends the previous literature by investigating a relatively new set of data in more depth than that has been examined by prior research, which focusses on the relationship between accounting information and the firm’s market value.

scholarly journals Does Audit Quality Moderate the Relationship between Accounting Information and the Share Price? Evidence from Jordan

2019 ◽  
Vol 12 (3) ◽  
pp. 58
Author(s):  
Yazan Oroud ◽  
Md. Aminul Islam ◽  
Tunku Salha Tunku Ahmad ◽  
Anas Ghazalat
Keyword(s):  
Panel Data ◽  
Financial Crisis ◽  
Firm Size ◽  
Audit Quality ◽  
Accounting Information ◽  
Listed Companies ◽  
Cash Flows ◽  
Share Price ◽  
Share Prices ◽  
The Relationship

Effect of accounting information on the share price has been having the share of attention from researchers for over six decades owing to the increasing of global financial crisis. Hence, this study attempts to contribute to literature by investigating such relationship in Jordan, a developing country. Specifically, this study investigates the relationship between the cash flow and accruals on share price of listed companies on Amman Stock Exchange for the year 2002 to 2014 also the effect of financial crisis on the share price before and after 2008. The model of this study was theoretically founded on both the agency and the signaling theories. To examine the developed model, the required data were gathered from the annual reports of 236 listed Companies. In analyzing the data, this study utilized the panel data methodology on 117 companies with 1521 observations. Moreover, this study used audit quality (audit firm size and audit tenure) as moderating variable. Based on the panel data results, the fixed effect model was used to examine the effect of the cash flows and accruals on the share price. The accruals and cash flows combined have significant effects on the share prices of the Jordanian companies listed on ASE. Audit quality, whether auditor’s firm size or auditor’s tenure, has significant moderating effect on associations of the share prices with accruals and with cash flows and the 2008 financial crisis had negative effects on share prices of the Jordanian companies listed on ASE. This study provides deep insights into relative usefulness of cash-based and accrual-based accounting measures and assist investors, regulators, analysts, and other stakeholders in evaluating the liquidity and financial performance of Jordanian companies listed on ASE, which may result in better allocation of economic resources by enabling the investors to take informed investment decisions, thus promoting a more efficient Jordanian capital market.

scholarly journals Impact of Accounting Information on Share Price: Empirical Evidence from Pakistan Stock Exchange

2016 ◽  
Vol 3 (1) ◽  
pp. 124
Author(s):  
Muhammad Asif ◽  
Kashif Arif ◽  
Waqar Akbar
Keyword(s):  
Capital Market ◽  
Stock Prices ◽  
Stock Exchange ◽  
Explanatory Power ◽  
Accounting Information ◽  
Time Frame ◽  
Share Price ◽  
Share Prices ◽  
The Impact ◽  
The Relationship

Purpose—The purpose of this paper is to examine the relationship between accounting information and share price. In order to achieve this, a model that includes specific accounting ratios (earning per share, book value per share, capital employed per share and operating cash flow per share) and shares a price is developed. Design/methodology/approach—The data were collected from the companies listed in KSE-30 index. The time frame spans from 2006 to 2013 and OLS regression models were used to examine the relationshipsFindings—The resulting evidence suggest that accounting information parameters have significant influence on share price and they have joint explanatory power in determining stock prices. This research finds the consistent results with pervious empirical researches.Originality/value—The present study adds to the existing literature by examining the impact of accounting information on share prices within the context of an emerging capital market such as Pakistan Stock Exchange using KSE-30 companies. This is believed to be the first study which considers the aforementioned issues in the Pakistan’s capital market environment.

scholarly journals ASSESSING THE IMPACT OF ACCOUNTING INFORMATION ABOUT COMPANIES ON THEIR STOCK QUOTES: AN EMPIRICAL ANALYSIS OF THE ACTIVITIES OF COMPANIES PARTICIPATING IN KUWAIT AND SAUDI ARABIA STOCK EXHANGES

2021 ◽  
pp. 5-14
Author(s):  
F. Rahal
Keyword(s):  
Market Share ◽  
Stock Exchange ◽  
Accounting Information ◽  
Share Price ◽  
Return On Equity ◽  
Share Prices ◽  
Listed Firms ◽  
Kuwait Stock Exchange ◽  
Equity Ratio ◽  
The Impact

Market Share Prices have important roles in determining the performance of the companies. Companies aim continuously to have a high market share prices for many goals. Therefore, understanding all variables that affect share prices is vital for investors. To examine if the Accounting Information affects market share prices, we studied the effect of some financial ratios determined from accounting statements on share prices for listed firms on Kuwait Stock Exchange and Saudi Stock Exchange. For Kuwait stock exchange, the quantitative methodology relied on the panel multiple regression through compiling and analyzing the Accounting Information and Market Share Price using secondary data for the period 2011 – 2018. The independent variables are Return on Equity (ROE), Earning per Share (EPS), and Dividend per Share(DPS) and the dependent variable is Market Share Price (MSP) of premier listed companies on Kuwait stock exchange. The analysis of the coefficient of correlation (R) shows that the correlation is very strong among DPS and EPS, DPS and ROE, EPS and ROE whilst it is strong among MSP and ROE, MSP and DPS, and EPS and MSP. Moreover, the variation of the three variables affects strongly the variation of MSP significantly on 1%. Therefore, there is a cause-effect relation between Accounting Information and MSP. Moreover, this paper examines the impact of return and leverage ratios on the Market Share Price of listed firms on Saudi Stock Exchange. The panel-data approach of fixed effect is used during the period of 2015 to 2018. To achieve the purpose of research return on equity as a proxy for profitability information, debt to equity ratio as a proxy for profitability ratio and natural logarithm of total assets as a proxy for the firms’ size are considered as dependent variables while market share price is considered as an independent variable. The results indicate that debt ratio and degree of financial leverage is negatively determining the share price while size has significant positive impact on the share. Debt to equity ratio is insignificant in effecting share price.

IFRS convergence and revisions: value relevance of accounting information from East Africa

2017 ◽  
Vol 7 (3) ◽  
pp. 352-368 ◽  
Author(s):  
Erick Rading Outa ◽  
Peterson Ozili ◽  
Paul Eisenberg
Keyword(s):  
East Africa ◽  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Accounting Standards ◽  
Cross Product ◽  
Sources Of Information ◽  
Content Type ◽  
Share Prices ◽  
Product Term

Purpose The purpose of this paper is to examine the relative value relevance of accounting information arising from the adoption of converged and revised International Accounting Standards (IAS)/International Financial Reporting Standards (IFRS) in East Africa. Design/methodology/approach The research applies “same firm year” design for identification of the effects of changes in accounting standards. A model similar to Ohlson’s price model and random-effects GLS are used to estimate R2 of the regressions of share prices on book values and earnings. Findings The results show that accounting information prepared from revised and converged IAS/IFRS display higher value relevance and also increased following the revision and convergence of IAS/IFRS. The cross-product term is more significant in the post-revision/convergence period thus providing further evidence for increased value relevance after the revision of IAS/IFRS. The results are robust to various models and show that value relevance in East Africa is relatively lower than that of the developed markets. Originality/value The current study provides empirical evidence that value relevance increases with converged/revised IAS/IFRS based on quasi natural experimental setting in East Africa. The authors also extend the debate on whether value relevance is relevant in emerging markets, which are regarded as imperfect markets with few regulations, weak enforcement and limited sources of information. The results may be useful to accounting preparers, regulators, investors, standard setters and countries seeking to adopt IAS/IFRS in developing countries.

scholarly journals Perceived use of accounting information and practices of accounting in micro enterprises of developing countries

2020 ◽  
Vol 19 (4) ◽  
Author(s):  
Zakir Hosen ◽  
Takibur Rahman ◽  
Mamun ur Rashid
Keyword(s):  
Decision Making ◽  
Developing Countries ◽  
Research Question ◽  
Accounting Information ◽  
Business Decision ◽  
Current Accounting ◽  
Positive Effects ◽  
Business Entities ◽  
Micro Enterprises ◽  
Current Practices

Research question: What is the perceived use of accounting information and current practices of accounting in micro enterprises? Motivation: Business decisions are more accurate and focused if they are made based on reliable information, for instance, accounting information. However, the use of accounting information in decision-making varies among the business entities, which is even poor in micro enterprises in developing countries. Idea: This study aims to examine perceived use of accounting information in decision-making and current practices of accounting in micro enterprises of Bangladesh. Data: The data include the characteristics of owner and business, perception on accounting systems, the use of accounting information (ACI) in decision-making and the current accounting practices collected from 148 respondents. Tools: The data are analyzed using standard descriptive statistical tools and multivariate regression. Findings: We find that the perception regarding the use of ACI in decision-making is low. Furthermore, the existing practices of accounting in surveyed entities are very low. The key practices, in terms of weighted mean, are cash reconciliation and practices of budgeting. Furthermore, the number of employees in the enterprises has a positive significant relationship with the perception regarding the use of ACI in decision-making. Besides, enterprises practicing accounting have higher performance. In addition, the size, and the nature of business have statistically significant positive effects on turnover. Contribution: This study may help stakeholders in understanding the role of accounting in business decision-making and its impacts on financial performance of the micro enterprises in developing countries.

scholarly journals RELEVANCE OF ACCOUNTING INFORMATION TOWARDS SHARE PRICES OF JAKARTA ISLAMIC INDEX (JII) LISTED COMPANIES

2021 ◽  
Vol 5 (1) ◽  
Author(s):  
Fitri Utami ◽  
Slamet Haryono ◽  
Abdurrahman Niarman
Keyword(s):  
No Value ◽  
Stock Prices ◽  
Value Relevance ◽  
Accounting Information ◽  
Share Price ◽  
Return On Equity ◽  
Share Prices ◽  
Panel Data Regression ◽  
Data Regression ◽  
And Performance

Accounting information has an important role in describing the condition and performance of a company. However, some investors have not fully used accounting information in sorting out share purchases. This study examines the relevance of accounting information to share prices in companies listed on the Jakarta Islamic Index (JII) for the period 2015 to 2020. The accounting information used is Earnings per Share (EPS), Book Value (BV), Return On Equity (ROE), Net Profit Margin (NPM), and Current Ratio (CR). With the panel data regression analysis method, the researcher found that collectively all accounting information (EPS, BV, ROE, NPM and CR) were stated to have relevance value in explaining their effect on stock prices. Individually, only BV and ROE have relevance value in influencing stock prices. As for EPS, NPM and CR have no value relevance to the share price of companies listed on the Jakarta Islamic Index (JII) for the period 2015 to 2019

scholarly journals DEVELOPMENT OF ACCOUNTING INFORMATION SYSTEMS AND THE BARRIERS FACED IN DEVELOPING NATIONS

2020 ◽  
Vol 10 (2) ◽  
pp. 84-96
Author(s):  
Ali Serhan ◽  
Keyword(s):  
Developing Countries ◽  
Information Systems ◽  
Research Study ◽  
Accounting Information ◽  
Organizational Structures ◽  
Developing Nations ◽  
Training And Education ◽  
Financial Reports ◽  
Accounting Information Systems

Accounting Information Systems facilitate the automation of accounting information. The accounting information of an organization creates the foundation on which the entity’s financial reports are generated. In spite of the fact that plenty of attention has been placed to the development and advancement of accounting professions in the developing countries, there has been very minimal emphasis placed in determining the implementation of accounting information systems. The main purpose of this research study is to examine the development of accounting information systems and the barriers that are experienced in developing nations, with a specific case study on Lebanon. The findings of the study established that the barriers include organizational structure, lack of technological advancements, poor training and education, and financial problems in the costly setting up of AIS. The strategies that organizations should take up include the training and education of managers and accountants within the organizations to gain competencies in carrying out accounting information systems, gain financially feasible contracts for setting up the systems and changing organizational structures to embrace advancements in technology.

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