Journal Screenshot

International Journal of Academic Research in Accounting, Finance and Management Sciences

Open Access Journal

ISSN: 2225-8329

Factors Affecting the Value Relevance of Accounting Information

Mahmoud Dehghan Nayeri, Ali Faal Ghayoumi, Mohammad Ali Bidari

Open access

The present study examines the factors affecting the value relevance of accounting information for investors in the Tehran Stock Exchange over the period of six years. In this study, the effect of four factors; being profitable or loss generating, company size, earnings stability and company growth on the value relevance of accounting information have been studied. For this purpose Ohlson model and the cumulative regression analysis is used in order to examine the hypotheses and as the basis of data analysis T-test by Regression coefficient analysis is deployed. Findings confirm that these factors influence on the value relevance of accounting information for investors in Tehran Stock Exchange. Based on this study it can be concluded that accounting information of companies with profitability, small companies, companies with stable high earnings and companies with high growth rate are more value relevant in the Tehran’s stock market. These results are more useful for Iranian investors in their investing decision makings.

Accounting Standards Codification Committee. (2002) Accounting Standards, Tehran, Auditing Organization, Edition 160, Theoretical bases of financial reporting in Iran (Accounting Standards appendices)
Ali, A., & Hwang, L. (2000). “Country-specific factors related to financial reporting and the value-relevance of accounting data.”, Journal of Accounting Research , 38 , pp. 1–21.
Barth, M. E., Beaver, W. H., & Landsman, W. R. (2001), "The Relevance of the Value Relevance Literature for Financial Accounting Standard Setting: Another View", Journal of Accounting and Economics, 31: pp. 77–104.
Benayed, M. R., & Abaoud, E. (2006). "Value relevance of Accounting Earnings and the Information Contents : Empirical Evidence in Tunisian Stock Exchange", www.SSRN.COM
Chen, J., Chen, S., & Su, X. (2001). "Is accounting information value-relevant in the emerging Chinese stock market? ", Journal of International Accounting Auditing and Taxation, 10(1): pp. 1–22.
Collins, D. W., Maydew, E. L., & Weiss, I. S. (1997), "Changes in the value-relevance over the past forty years", Journal of Accounting and Economics, 24: pp. 39–67.
Elliott, J., & Hanna, J., (1996),”Repeated accounting write-offs and the information content of earnings”, Journal of Accounting Research, 34: pp. 135–155.
Francis, J., & Schipper, K. (1999). "Have Financial Statements Lost their Relevance?", Journal of Accounting Research, 37: pp. 319-324 .
Frank, K. (2002). “The effect of growth on value relevance of accounting data.”, Journal of Business Research , 55 (1), pp. 69–78.
Gjerde, Ø., Knivsflå, K., Sættem, F. (2007), "The Value-Relevance of Financial Reporting in Norway 1965-2004.", www.SSRN.COM
Goodwin, J., & Ahmad, K. (2006). “Longitudinal Value relevance of Earnings and Intangible Assets: Evidence from Australian Companies.”, Journal of International Accounting, Auditing and Taxation, 15, pp. 72–91.
Hassan, O. A., Romilly, P., Giorgioni, G., & Power, D., (2009), " The value relevance of disclosure: Evidence from the emerging capital market of Egypt ", The International Journal of Accounting, NO.44, pp. 79-102.
Hayn, C. (1995). "The information content of losses", Journal of Accounting and Economics, 20: pp. 125–153.
King, R. D., and Langli, J. C. (1998), "Accounting diversity and company valuation." The International Journal of Accounting, 33: pp. 529-567.
Lev, B., and Zarowin, P. (1999), "The boundaries of financial reporting and how to extend them.", Journal of Accounting Research, 37: pp. 353-385.
Ohlson, J. (1995). "Earnings, Book Values, and Dividends in Equity Valuation", Contemporary Accounting Research, (Spring): pp. 661–687.
Saghafi, A., and Talaneh, A. (2006), “The role of book value and profit and transfer options in equity valuation in companies listed in Tehran Stock Exchange.” Accounting and Auditing Review Journal, Tehran University. Edition 44, pp. 3-34.
Sami, H., & Zhou, H. (2004)" A Comparison of Value Relevance of Accounting Information in Different Segments of the Chinese Stock Market." The International of Accounting, 39: pp. 403–427.
Skinner, D. J. (1993), "The investment opportunity set and accounting procedure choice", Journal of Account Econ, NO. 16(October), pp. 407– 445.

In-Text Citation: (Nayeri et al., 2012)
To Cite this Article: Nayeri, M. D., Ghayoumi, A. F., & Bidari, M. A. (2012). Factors Affecting the Value Relevance of Accounting Information. International Journal of Academic Research in Accounting Finance and Management Sciences, 2(2), 86–95.