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Role of Accounting Information in Assessing Stock Prices in Bangladesh

Author

Listed:
  • Nazmul Hassan,

    (Department of Business Administration, East West University.)

  • Hasan Md. Mahmood Ul Haque

    (School of Business Administration, Independent University, Bangladesh.)

Abstract

This paper seeks to explore the relationship between share prices and the value-relevance of accounting information. The basic Ohlson (1995) valuation model has been used to conduct the research using a sample of 93 companies from six broad industries listed on the Dhaka Stock Exchange (DSE), Bangladesh. The adjusted (R²) and estimated regression coefficients of accounting variables are tested in this model. Results report that both Earnings per Share (EPS) and Book Value (BV) have influential power in determining share prices. But, results of the individual effect of EPS and BV to determining share price indicate that the EPS played an increasingly considerable role in projecting share prices than that of BV. Thus, EPS has become more informative to equity investors in predicting the share prices.

Suggested Citation

  • Nazmul Hassan, & Hasan Md. Mahmood Ul Haque, 2017. "Role of Accounting Information in Assessing Stock Prices in Bangladesh," International Journal of Business and Social Research, LAR Center Press, vol. 7(10), pages 18-25, October.
    • Handle: RePEc:lrc:larijb:v:7:y:2017:i:10:p:18-25
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    File URL: https://thejournalofbusiness.org/index.php/site/article/view/1089/671
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    References listed on IDEAS

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    1. Scott Pirie & Malcolm Smith, 2008. "Stock prices and accounting information: evidence from Malaysia," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 16(2), pages 109-133, July.
    2. Aiman A. Ragab & Mohammad M. Omran, 2006. "Accounting information, value relevance, and investors’ behavior in the Egyptian equity market," Review of Accounting and Finance, Emerald Group Publishing, vol. 5(3), pages 279-297, August.
    3. Wael Mostafa, 2016. "The value relevance of earnings, cash flows and book values in Egypt," Management Research Review, Emerald Group Publishing Limited, vol. 39(12), pages 1752-1778, December.
    4. Collins, Daniel W. & Maydew, Edward L. & Weiss, Ira S., 1997. "Changes in the value-relevance of earnings and book values over the past forty years," Journal of Accounting and Economics, Elsevier, vol. 24(1), pages 39-67, December.
    5. Gjerde, Øystein & Knivsflå, Kjell & Sættem, Frode, 2008. "The value-relevance of adopting IFRS: Evidence from 145 NGAAP restatements," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 17(2), pages 92-112.
    6. Francis, J & Schipper, K, 1999. "Have financial statements lost their relevance?," Journal of Accounting Research, Wiley Blackwell, vol. 37(2), pages 319-352.
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    Cited by:

    1. Larojan, Chandrasegaran, 2021. "Impact of Accounting Ratios on Stock Market Price of Listed companies in Colombo Stock Exchange," OSF Preprints xwk7r, Center for Open Science.

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    More about this item

    Keywords

    Book Value (BV); Earnings per Share (EPS); Value Relevance.;
    All these keywords.

    JEL classification:

    • D8 - Microeconomics - - Information, Knowledge, and Uncertainty
    • E20 - Macroeconomics and Monetary Economics - - Consumption, Saving, Production, Employment, and Investment - - - General (includes Measurement and Data)
    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy

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