DOI: 10.5176/2251-1997_AF18.29
Authors: Hossein Fakhari, Yasser Rezaei Pitenoei
Abstract:
This study seeks to find out how information environment is associated with value relevance of accounting information. Relying on an innovative method, it combines various observable variables including firm size, institutional ownership, growth opportunities, age, bid-ask spread, number of shareholders, earnings forecast errors, stock turnover, Amihud share illiquidity and stock return, and converts them into a comprehensive index to measure information environment. Following Ohlson’s (1995) model, earnings per share-to-market value ratio and book value per share-to-market value ratio are used as indices of income statement and balance sheet, respectively to measure value relevance of accounting information. The results of examining 400 firm-year observations of the firms listed on the Tehran Stock Exchange during the years 2011-2015 using panel data reveal that corporate information environment enhances the relevance of earnings value per share (value relevance of income statement) and relevance of book value per share (value relevance of balance sheet).
Keywords: corporate information environment, comprehensive index of information environment, value relevance of accounting information.
Updating...