scholarly journals ANALISIS KOMPARASI RELEVANSI NILAI INFORMASI AKUNTANSI SEBELUM DAN SESUDAH ADOPSI PENUH IFRS DI INDONESIA

2018 ◽  
Vol 11 (1) ◽  
Author(s):  
Sugi Suhartono
Keyword(s):  
Stock Prices ◽  
Value Relevance ◽  
Accounting Information ◽  
Coefficient Of Determination ◽  
Wrong Decision ◽  
Book Value ◽  
Chow Test ◽  
Study Results ◽  
Before And After ◽  
Accounting Report

<p><em>Many companies had adopted but there is a differences on the quality of the accounting report that were created before and after the adoption that has not been studied by academics, because of this researcher wants to investigate whether there are any differences in value relevance of accounting information before and after the full adoption of IFRS. Based on regulation theory, signalling theory, market efficient theory and clean surplus theory. The gap between action that were taken by management and the will of shareholders could possibly happen when the asymmetric information disrupt the capability of investor to supervise managerial level and lead the investor to make a wrong decision. Samples of this study consisted of 16 companies that are part of LQ 45 Index of Indonesia Stock Exchange. Purposive Sampling method is used to take the sample. The data analysis technique used to test the hypothesis is Chow Test. Chow test shows F value (0.57985) is smaller than F table (2.71). Then, in testing of the coefficient of determination, which the value of adjusted R<sup>2</sup> before the full adoption of IFRS is 85.7% and after the full adoption of IFRS is 82.2%. This shows a 3.5% reduction of adjusted R<sup>2</sup>. The reduction of the adjusted R<sup>2</sup> indicates that the adjusted R<sup>2</sup> can not be explained by measuring stock prices, earnings per share, and book value per share after full adoption of IFRS. Based on the study results show that the full adoption of IFRS does not affect the relevance of the value of accounting information on companies listed in the LQ 45 index.</em><em></em></p><p><em> </em></p><p><strong><em>Keyword</em></strong><em> : </em><em>Value Relevance, Profit, Equity Book Value, IFRS Adoption</em></p>

scholarly journals Relevance of earnings and book value: Evidence from listed pharmaceutical companies

2020 ◽  
Vol 18 (1) ◽  
pp. 196-206
Author(s):  
Mwila Mulenga ◽  
Meena Bhatia
Keyword(s):  
Decision Making ◽  
Stock Returns ◽  
Stock Prices ◽  
Value Relevance ◽  
Accounting Information ◽  
Least Square ◽  
Sufficient Evidence ◽  
Pharmaceutical Companies ◽  
Book Value ◽  
The Impact

For accounting information to be useful for decision making it is essential that it is relevant for decision-making and should have a significant relation with stock prices or stock returns. Value relevance research aims to explain the impact of accounting information on stock prices or stock returns. This study examines the value relevance of earnings and book values on listed Indian pharmaceutical companies’ stock prices by using the Ohlson price model. The study gathered a series of panel data from 2006 to 2015 from the Nifty Pharma index. Ordinary least square and panel regression estimation were done using EViews. The findings provide sufficient evidence of those earnings per share (EPS) and book value per share (BVPS) jointly and individually for the Nifty Pharma index sample played an essential role in influencing stock prices. However, there is an insignificant decline in the combined value relevance of EPS and BVPS. The findings reveal that the EPS and BVPS played an important role in influencing stock prices. However, explanatory powers of EPS and BVPS in all years are significantly lower than that of developed countries. Overall findings show mixed results on the considerable influence of firm size on the value relevance of accounting information. This study’s findings have implications for analysts, investors, and other market participants; they should use EPS and BVPS in the equity valuation of pharmaceutical companies for better allocation of resources in capital markets.

Value relevance of accounting information: an emerging country perspective

2018 ◽  
Vol 14 (4) ◽  
pp. 473-491 ◽  
Author(s):  
Bismark Badu ◽  
Kingsley Opoku Appiah
Keyword(s):  
Financial Reporting ◽  
Stock Prices ◽  
Value Relevance ◽  
Stock Exchange ◽  
Accounting Information ◽  
Price Model ◽  
Content Type ◽  
Book Value ◽  
Emerging Country ◽  
Ghana Stock Exchange

Purpose This paper aims to examine the value relevance of accounting information from an emerging country perspective. Design/methodology/approach The study adopts Ohlson (1995) Price model to examine the extent to which accounting information explain variation in stock prices of listed firms on the Ghana Stock Exchange. Findings The study reveals that earnings and book value of equity exhibit a positive and significant relationship in stock prices. Earnings explain higher variation in stock market values on the Ghana Stock Exchange compared to book value of equity. The study however finds that despite the introduction of the International Financial Reporting Standards in Ghana, the value relevance of book value and earnings have declined significantly over the period 2005-2014. Research limitations/implications A key implication is that regulators of capital markets, standards setters and accounting practitioners need to consistently improve upon the quality of financial reporting disclosures which will boost the confidence of users in their reliance on financial statements as the basis for choosing among alternative use of scarce resources. The authors adopted only the price model in testing the hypotheses. However, to provide comprehensive understanding of value relevance of accounting information, future studies can combine both the price and the return models. Originality/value The authors extend prior literature in the Ghanaian context with recent data. Finally, the study adds to the efficient market hypothesis by showing how share prices reflect accounting information produced by Ghanaian firms.

scholarly journals The Difference between Stock Prices before and after Implementation of International Financial Reporting Standards

2017 ◽  
Vol 6 (4) ◽  
pp. 285
Author(s):  
Shu-Ling Hsu
Keyword(s):  
Financial Reporting ◽  
Capital Market ◽  
Stock Prices ◽  
Value Relevance ◽  
Financial Statements ◽  
Reporting Standards ◽  
Book Value ◽  
Financial Reporting Standards ◽  
Earnings Per Share ◽  
Before And After

Following the trend of capital market globalization, many countries have begun to use unified accounting standards. The resulting, financial statements are consistent and can thus attract foreign investment, and reduce the costs of multinational companies with regard to preparing financial statements. After the implementation of the International Financial Reporting Standards (IFRS), the earnings and book value of the shareholders’ equity are more relevant to stock prices, and this is also the case in Taiwan. Because the financial statements are different before and after incorporating IFRS, this has had a significant influence in the Taiwanese financial industry. This study analyzes and explains the impacts of the earnings and book value of equity on stock prices. We take a sample of financial firms in the years 2012 and 2013 for empirical research, and the results show that the earnings per share and book value of equity have a positive and significant impact on stock prices, with the earnings per share being most significant. The results also support the hypothesis proposed in this paper: There is a decline in the value relevance of earnings, but an increase in the value relevance of book value of shareholders’ equity, after implementation of IFRS. This implies the implementation of IFRS has valuable relevant information for capital market investments.

Value relevance of earnings and book values during IFRS convergence period in India

2021 ◽  
Vol ahead-of-print (ahead-of-print) ◽  
Author(s):  
Anubha Srivastava ◽  
Harjum Muharam
Keyword(s):  
Decision Making ◽  
Capital Market ◽  
Stock Prices ◽  
Value Relevance ◽  
Accounting Information ◽  
Content Type ◽  
Book Value ◽  
Market Participants ◽  
Conversion Period ◽  
Book Values

Purpose The authors aim to examine the association between earnings and book values with stock prices in India during the IFRS convergence period because, in India, the literature is yet to investigate more about IFRS convergence and its impact on the financial reporting environment. Hence, the purpose of this study is to assess the influence of IFRS conversion on the value relevance of accounting information throughout the IFRS conversion period. Design/methodology/approach The current paper endeavors to investigate the earnings and book values affiliation with stock prices in India during the IFRS convergence period by employing a price valuation model (Ohlson’s Model). The study assembled a total of 3,440 firm-year observations from the National Stock Exchange in India over five years, which signifies the IFRS conversion period (2015–2019). Findings The research findings displayed that accounting information such as earnings, book value has value relevance throughout the IFRS enforcement period; however, the value relevance has been increasing for earnings and showing a descending association for book value. The significant explanatory power of earnings reveals that market participants give more weightage to earnings than book values. Overall, the findings of the study will facilitate improved decision making for both, capital market participants and regulators, by highlighting the key areas for improvement in the Indian capital market. Research limitations/implications This study also extends a discussion on the subject in those economies where regulations are weak and the market is imperfect with asymmetrical information. Practical implications The research outcome provides for empirical shreds of evidence regarding the value relevance of accounting information during IFRS enforcement in India, where IFRS is a recent emergence. Social implications This paper examines the value relevance of accounting information during IFRS convergence period in India which will felicitate improved decision making for both, market regulators and investors. Originality/value This research is the first factual documentation regarding value relevance of earnings and book value during the IFRS enforcement process in India with the most recent data and contributes to the limited study conducted in developing nations like India.

Corporate governance and value relevance of accounting information

2020 ◽  
Vol 36 (2) ◽  
pp. 249-262
Author(s):  
Hesham I. Almujamed ◽  
Mishari M. Alfraih
Keyword(s):  
Financial Reporting ◽  
Value Relevance ◽  
Accounting Information ◽  
Empirical Support ◽  
Board Size ◽  
Content Type ◽  
Book Value ◽  
Board Characteristics ◽  
Market Participants ◽  
The Impact

Purpose This paper aims to explore how the characteristics of the board of directors (BoD) shape earnings and book value information available to market participants. Design/methodology/approach The authors investigated the impact of board size, presence of non-executives and role duality as proxies of effective corporate governance on the value relevance of financial reporting for 178 firms on the Kuwait stock exchange in 2013. Regression analysis based on Ohlson’s (1995) valuation model was used to test hypotheses. Findings The authors found that board size was significantly associated with company value and that Kuwaiti firms with large boards increased the value-relevance of earnings and book value. The influence of role duality was positive although not significant. The presence of non-executives on the board had a negative correlation with market value (not significant). Research limitations/implications These findings deliver empirical support for the prediction that the characteristics of the BoD improve the value relevance of financial reporting. Limitations such as small sample size and one-year duration of the study did not negate the basic findings, however. Future studies will use larger samples, longer duration and additional board characteristics. Practical implications This study provides empirical support for the hypothesis that board size influences market valuation. This study may benefit managers, investors and other decision-makers. Originality/value This study delivers empirical evidence on the impact of board characteristics on the value relevance of accounting information. It will be useful for regulators and market participants monitoring the influence of board characteristics on the value relevance of accounting information.

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.

The role of audit quality in firm valuation

2016 ◽  
Vol 58 (5) ◽  
pp. 575-598 ◽  
Author(s):  
Mishari M. Alfraih
Keyword(s):  
Audit Quality ◽  
Value Relevance ◽  
Accounting Information ◽  
Institutional Setting ◽  
Content Type ◽  
Book Value ◽  
Big 4 ◽  
Audit Firms ◽  
Audit Team

Purpose The purpose of this paper is to examine the effect of audit quality on the value relevance of earnings and book value. Because joint audit is mandated for all Kuwait Stock Exchange-listed firms, it is hypothesized that the higher the quality of the audit team (as measured by the number of Big 4 audit firms in the joint audit team), the higher the value relevance of earnings and book values for equity valuation. Design/methodology/approach Consistent with prior research, the value relevance of earnings and book value is measured by the adjusted R2 derived from the Ohlson’s 1995 regression model. The number of Big 4 audit firms represented on the firm’s audit team is used as a proxy for audit quality. Three tiers of audit quality exist, namely, two non-Big 4 audit firms, one Big 4 and one non-Big 4 audit firms or two Big 4 audit firms. To address this paper’s objective, the association between audit quality and the value relevance of earnings and book value were examined using four approaches. The final sample consists of 1,836 firm-year observations and covers fiscal years from a 12-year period (2002-2013). Findings Taken together, the four approaches used collectively provide empirical evidence that audit quality positively and significantly affects the value relevance of accounting measures to market participants. Importantly, the results reveal significant variations in the value relevance of earnings and book value jointly across the three possible auditor combinations. Research limitations/implications Although using auditor size as a proxy for audit quality is well established in the auditing literature, a limitation of that proxy is that it measures audit quality dichotomously, which implicitly assumes a homogeneous level of audit quality within each group. Practical implications The findings show the importance of high-quality and rigorous external audits in improving the value relevance of accounting information. Originality/value This study contributes to the extent literature on audit quality by exploring the role of audit quality in a unique institutional setting that imposes mandatory joint audits. Although prior studies have investigated the effect of joint audit pair choice on earnings management and audit fee premium, this study is the first to investigate the effect of joint audit pair choice on the value relevance of accounting information.

scholarly journals RELEVANSI NILAI INFORMASI AKUNTANSI ALTERNATIF SERTA IMPLIKASINYA TERHADAP PROSES PENGAMBILAN KEPUTUSAN INVESTASI DENGAN MENGGUNAKAN SEQUENTIAL EXPLANATORY MIXED METHOD

2020 ◽  
Vol 3 (1) ◽  
pp. 87
Author(s):  
Mada Purwanto Wahyu Nugroho ◽  
Ahmad Syifaudin
Keyword(s):  
Mixed Method ◽  
Stock Prices ◽  
Stock Price ◽  
Value Relevance ◽  
Stock Exchange ◽  
Accounting Information ◽  
Financial Statements ◽  
Sources Of Information ◽  
Sequential Explanatory Mixed Method ◽  
Sequential Explanatory

Distortion of information is one of the inherent accounting risks in financial statements. Financial statements are one of the fundamental sources of information that can be used in investment decision making in the Indonesia stock exchange. If investors use this information, then investors also have the same risk that is the distortion of information contained in financial statements. This research tries to test whether stock prices can be more explained through alternative accounting information or information contained in financial statements. This research was conducted using a sequential explanatory mixed method. Using data on companies listed in the Business 27 index, tested using path analysis through multiple regression models, the results of this research indicate that alternative accounting information has not been able to explain variations in stock price changes compared to accounting information contained in financial statements. Meanwhile, the results of the analysis using qualitative data indicate there is a match between the results of quantitative analysis and qualitative analysis. Keywords: Value Relevance; Alternative Accounting Information; Investment Decisions

scholarly journals Earnings shocks: An event study on Boursa Kuwait

2021 ◽  
Vol 10 (3) ◽  
pp. 363-368
Author(s):  
Saad B F M AlHajraf
Keyword(s):  
Stock Prices ◽  
Important Implication ◽  
Stock Exchange ◽  
Earnings Announcements ◽  
Abnormal Returns ◽  
Rate Of Return ◽  
Study Results ◽  
Kuwait Stock Exchange ◽  
Before And After ◽  
Abnormal Rate

This study investigates the effects of earnings announcements on stock prices in Boursa Kuwait, formerly known as the Kuwait Stock Exchange (KSE).  The data spans the period 2018–2020, and both positive and negative earnings announcements are employed as shock events and their effects assessed. The study results show that there is a statistically abnormal rate of return before and after the earnings announcements and that most abnormal returns are just after the earnings announcement.  This most likely indicates that Boursa Kuwait is a semi-strong efficient stock market.  One important implication is an indication that insider-related trading might be absent in Boursa Kuwait. 

scholarly journals PENGARUH RASIO KEUANGAN TERHADAP HARGA SAHAM (STUDI PADA PERUSAHAAN SEKTOR PERTAMBANGAN MINYAK YANG TERDAFTAR DI BURSA EFEK INDONESIA TAHUN 2014-2018)

2021 ◽  
Vol 4 (2) ◽  
pp. 187-197
Author(s):  
Sulis Tiono ◽  
Bambang Sugeng Dwiyanto
Keyword(s):  
Stock Prices ◽  
Stock Price ◽  
Stock Exchange ◽  
Secondary Data ◽  
Financial Statements ◽  
Financial Ratios ◽  
Coefficient Of Determination ◽  
Mining Sector ◽  
Return On Equity ◽  
Book Value

Stock price fluctuations are natural and almost occur in all companies in various sectors, including companies in the oil mining sector so that price changes affect the company's financial performance and stock prices which can be analyzed fundamentally using financial ratios to aspects in the financial statements. The framework of this research is to analyze the effect of financial ratios on stock prices. The population and sample used are oil mining sector companies listed on the Indonesia Stock Exchange 2014-2018. The sampling method used is purposive sampling or judgmental sampling. Sources of data used are secondary data in the form of financial statements. The tool used for data collection is through the method of observation and analysis of the company's financial statements. The results showed, based on the t test value, stock prices were positively influenced by Return on Equity (ROE), Book Value (BV) and Price to Book Value (PBV), while negatively influenced by Debt To Equity Ratio (DER) and Net Profit. Margins (NPM). Based on the F test value, stock prices are positively influenced by ROE, DER, NPM, Earnings Per Share (EPS), BV, and PBV. Based on the coefficient of determination test (R2), stock prices are strongly influenced by ROE, DER, NPM, BV, and PBV by 91.5% and influenced by other variables by 8.5%.

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