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Accounting quality and stock price informativeness: a cross-country study

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  • Adriana Tiron-Tudor
  • Andra Maria Achim (Nasca)

Abstract

This study investigates how accounting quality impacts the incorporation of firm-specific information into stock prices. Using data from 18 developed countries that apply IFRS, during the period 2004–2015, we find strong evidence that supports the hypothesis that accounting quality determines stock price informativeness. The results yield important policy implications because stock prices are a valuable source of information for many users, especially for the management of the listed companies. The study reveals accounting quality’s direct influence over the stock price informativeness, in the way that along with the improvement of accounting quality also increases the amount of firm-specific information embedded into stock prices.

Suggested Citation

  • Adriana Tiron-Tudor & Andra Maria Achim (Nasca), 2019. "Accounting quality and stock price informativeness: a cross-country study," Economic Research-Ekonomska Istraživanja, Taylor & Francis Journals, vol. 32(1), pages 2481-2499, January.
    • Handle: RePEc:taf:reroxx:v:32:y:2019:i:1:p:2481-2499
    DOI: 10.1080/1331677X.2019.1650655
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    Cited by:

    1. Yanthi Hutagaol-Martowidjojo & Jessie D. Yuwono & Kashan Pirzada, 2024. "Earnings quality, stock price synchronicity and foreign ownership: evidence of ASX200 firms," International Journal of Disclosure and Governance, Palgrave Macmillan, vol. 21(3), pages 476-487, September.
    2. Persakis, Antonios & Iatridis, George Emmanuel, 2023. "How economic uncertainty influences the performance of investor perceptions and behavior," Journal of International Accounting, Auditing and Taxation, Elsevier, vol. 51(C).

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