Value-Relevance of Accounting Information:Evidence from Iranian Emerging Stock Exchange
This study aims to investigate empirically the valuerelevance
of accounting information to domestic investors in Tehran
stock exchange from 1999 to 2006. During the present research
impacts of two factors, including positive vs. negative earnings and
the firm size are considered as well. The authors used earnings per
share and annual change of earnings per share as the income
statement indices, and book value of equity per share as the balance
sheet index. Return and Price models through regression analysis are
deployed in order to test the research hypothesis. Results depicted
that accounting information is value-relevance to domestic investors
in Tehran Stock Exchange according to both studied models.
However, income statement information has more value-relevance
than the balance sheet information. Furthermore, positive vs. negative
earnings and firm size seems to have significant impact on valuerelevance
of accounting information.
[1] Alford, A., Jones, J., Leftwich, R., Zmijewski, M., "The relative
informativeness of accounting disclosures in different countries",
Journal of Accounting Research, 1993, Supplement 31: 183-229.
[2] Amir, E., Harris, T.S., Venuti, E.K., "A comparison of value relevance
of US versus non-USGAAP accounting measures using Form 20-F
reconciliations", Journal of Accounting Research, 1993, Supplement 31:
230-264.
[3] Barth, M. E., Beaver, W. H., & Landsman, W. R. "The Relevance of the
Value Relevance Literature for Financial Accounting Standard Setting:
Another View", Journal of Accounting and Economics, 2001, 31: 77-
104.
[4] Bauman, M.P., "A Review of Fundamental Analysis Research in
Accounting", Journal of Accounting Literature, 1996, 15: PP 2-10.
[5] Beaver, W.H., Financial Reporting: An Accounting Revolution,
Prentice-Hall, Englewood Cliffs, NJ, 1998.
[6] Benayed, M.R., & Abaoud, E., "Value relevance of Accounting
Earnings and the Information Contents: Empirical Evidence in Tunisian
Stock Exchange", 2006, WWW.SSRN.COM.
[7] Chen, J., Chen, S., & Su, X., "Is accounting information value-relevant
in the emerging Chinese stock market?" , Journal of International
Accounting Auditing and Taxation, 2001, 10(1): 1-22.
[8] Collins, D. W., Maydew, E. L., & Weiss, I. S., "Changes in the valuerelevance
over the past forty years", Journal of Accounting and
Economics, 1997, 24: 39-67.
[9] Dumontier, P., Raffournier, B., "Accounting and Capital Market: A
Survey of the European Evidence", European Accounting Review, 2002,
NO.11, PP: 119 - 124.
[10] Easton, P., & Harris. T., "Earnings as an Explanatory Variable for
Returns", Journal of Accounting Research, 1991, 29: PP 19-36..
[11] Easton P.D., Sommers G.A., "Scale and the Scale Effect in Market-
Based Accounting Research", Journal of Business Finance and
accounting, 2002, NO.30, PP: 25 - 35.
[12] Elliott, J., & Hanna, J.,"Repeated accounting write-offs and the
information content of earnings", Journal of Accounting Research, 1996,
34: 135-155.
[13] Feltham, G.A., Ohlson, J.A., "Valuation and clean surplus accounting
for operating and financial activities." Contemporary Accounting
Research, 1995, 11: 689-732.
[14] Financial Accounting Standards Board, Statement of Financial
Accounting Concepts No. 2, Qualitative characteristics of accounting
information. FASB, Stamford, Connecticut, 1980.
[15] Francis, J., & Schipper, K., "Have Financial Statements Lost their
Relevance?", Journal of Accounting Research, 1999, 37: 319-324.
[16] Gjerde Ø., Knivsflå K., Sættem F., "The Value-Relevance of Financial
Reporting in Norway 1965-2004.", 2007, WWW.SSRN.COM.
[17] Harries, T.S., Lang, M. and Möller, H.P., "The value relevance of
German accounting measures: An empirical analysis." Journal of
Accounting Research, 1994, 32: 187-209.
[18] Hayn, C., "The information content of losses", Journal of Accounting
and Economics, 1995, 20: PP 125-153.
[19] King, R. D. and Langli, J. C., "Accounting diversity and firm valuation."
The International Journal of Accounting, 1998, 33: 529-567.
[20] Lev, B. and Zarowin, P., "The boundaries of financial reporting and how
to extend them.", Journal of Accounting Research, 1999, 37: 353-385.
[21] Ohlson, J., "Earnings, Book Values, and Dividends in Equity
Valuation", Contemporary Accounting Research, 1995, (spring): 661-
687.
[22] Sami, H., & Zhou, H., ., "A Comparison of Value Relevance of
Accounting Information in Different Segments of the Chinese Stock
Market", The International of Accounting, 2004, 39: 403-427.
[1] Alford, A., Jones, J., Leftwich, R., Zmijewski, M., "The relative
informativeness of accounting disclosures in different countries",
Journal of Accounting Research, 1993, Supplement 31: 183-229.
[2] Amir, E., Harris, T.S., Venuti, E.K., "A comparison of value relevance
of US versus non-USGAAP accounting measures using Form 20-F
reconciliations", Journal of Accounting Research, 1993, Supplement 31:
230-264.
[3] Barth, M. E., Beaver, W. H., & Landsman, W. R. "The Relevance of the
Value Relevance Literature for Financial Accounting Standard Setting:
Another View", Journal of Accounting and Economics, 2001, 31: 77-
104.
[4] Bauman, M.P., "A Review of Fundamental Analysis Research in
Accounting", Journal of Accounting Literature, 1996, 15: PP 2-10.
[5] Beaver, W.H., Financial Reporting: An Accounting Revolution,
Prentice-Hall, Englewood Cliffs, NJ, 1998.
[6] Benayed, M.R., & Abaoud, E., "Value relevance of Accounting
Earnings and the Information Contents: Empirical Evidence in Tunisian
Stock Exchange", 2006, WWW.SSRN.COM.
[7] Chen, J., Chen, S., & Su, X., "Is accounting information value-relevant
in the emerging Chinese stock market?" , Journal of International
Accounting Auditing and Taxation, 2001, 10(1): 1-22.
[8] Collins, D. W., Maydew, E. L., & Weiss, I. S., "Changes in the valuerelevance
over the past forty years", Journal of Accounting and
Economics, 1997, 24: 39-67.
[9] Dumontier, P., Raffournier, B., "Accounting and Capital Market: A
Survey of the European Evidence", European Accounting Review, 2002,
NO.11, PP: 119 - 124.
[10] Easton, P., & Harris. T., "Earnings as an Explanatory Variable for
Returns", Journal of Accounting Research, 1991, 29: PP 19-36..
[11] Easton P.D., Sommers G.A., "Scale and the Scale Effect in Market-
Based Accounting Research", Journal of Business Finance and
accounting, 2002, NO.30, PP: 25 - 35.
[12] Elliott, J., & Hanna, J.,"Repeated accounting write-offs and the
information content of earnings", Journal of Accounting Research, 1996,
34: 135-155.
[13] Feltham, G.A., Ohlson, J.A., "Valuation and clean surplus accounting
for operating and financial activities." Contemporary Accounting
Research, 1995, 11: 689-732.
[14] Financial Accounting Standards Board, Statement of Financial
Accounting Concepts No. 2, Qualitative characteristics of accounting
information. FASB, Stamford, Connecticut, 1980.
[15] Francis, J., & Schipper, K., "Have Financial Statements Lost their
Relevance?", Journal of Accounting Research, 1999, 37: 319-324.
[16] Gjerde Ø., Knivsflå K., Sættem F., "The Value-Relevance of Financial
Reporting in Norway 1965-2004.", 2007, WWW.SSRN.COM.
[17] Harries, T.S., Lang, M. and Möller, H.P., "The value relevance of
German accounting measures: An empirical analysis." Journal of
Accounting Research, 1994, 32: 187-209.
[18] Hayn, C., "The information content of losses", Journal of Accounting
and Economics, 1995, 20: PP 125-153.
[19] King, R. D. and Langli, J. C., "Accounting diversity and firm valuation."
The International Journal of Accounting, 1998, 33: 529-567.
[20] Lev, B. and Zarowin, P., "The boundaries of financial reporting and how
to extend them.", Journal of Accounting Research, 1999, 37: 353-385.
[21] Ohlson, J., "Earnings, Book Values, and Dividends in Equity
Valuation", Contemporary Accounting Research, 1995, (spring): 661-
687.
[22] Sami, H., & Zhou, H., ., "A Comparison of Value Relevance of
Accounting Information in Different Segments of the Chinese Stock
Market", The International of Accounting, 2004, 39: 403-427.
@article{"International Journal of Business, Human and Social Sciences:64328", author = "Ali Faal Ghayoumi and Mahmoud Dehghan Nayeri and Manouchehre Ansari and Taha Raeesi", title = "Value-Relevance of Accounting Information:Evidence from Iranian Emerging Stock Exchange", abstract = "This study aims to investigate empirically the valuerelevance
of accounting information to domestic investors in Tehran
stock exchange from 1999 to 2006. During the present research
impacts of two factors, including positive vs. negative earnings and
the firm size are considered as well. The authors used earnings per
share and annual change of earnings per share as the income
statement indices, and book value of equity per share as the balance
sheet index. Return and Price models through regression analysis are
deployed in order to test the research hypothesis. Results depicted
that accounting information is value-relevance to domestic investors
in Tehran Stock Exchange according to both studied models.
However, income statement information has more value-relevance
than the balance sheet information. Furthermore, positive vs. negative
earnings and firm size seems to have significant impact on valuerelevance
of accounting information.", keywords = "Value-Relevance of Accounting Information, Iranianstock exchange, Return Model, Price Model", volume = "5", number = "6", pages = "900-6", }
