Exploring the Relationship between Market Value and Accounting Numbers of Firms in Pakistan

Riaz, Salman; Liu, Yanping; Khan, Sajjad Hussain

doi:10.5296/ajfa.v7i1.7598

“…But a negative relationship between net asset value per share and stock price change was found by a study in Dhaka Stock Exchange consisting of 105 companies from 2000 to 2010 by Miah (2012). Most recently in a study in Pakistan by Riaz, Liu, and Khan (2015) ; Omura (2005) found that book value of share and earnings per share have statistically significant influence on the market price of stock So, it is found that although book value per share and stock price movement is positively linked in various developed and developing countries but in Dhaka Stock Exchange book value per share and stock price are negatively linked that represents a irrational behavior by the retail investor and finally resulted in market crash in 2011. Even after this big crash, Dhaka Stock Exchange represented stock prices volatility during last few years.…”

Section: Literature Review and Hypothesis Developmentmentioning

confidence: 99%

Stock Price Adjustment to Corporate Accounting Disclosure: A Quantitative Study on Dhaka Stock Exchange (DSE), Bangladesh.

Ghosh

¹

,

Ghosh²

2015

ijafr

4

3

0

View full text Add to dashboard Cite

This study has been designed to detect whether corporate accounting disclosures through annual report influence stock price movement in Dhaka Stock Exchange. To conduct our study, we gathered a series of panel data from 2010 through 2014 of 25 private commercial banks. Least square regression analysis has been done by incorporating fixed effect and random effect models and six models have been developed through Hausman Test. The resulting output revealed that “Earning per share”, “Return on equity” and “Net asset value per share” (book value) positively influenced stock price movement during our study period but “Earning per share” and “Net asset value per share” jointly can explain highest variation in stock price movement in DSE. Although past few studies showed weak form of market efficiency in DSE , this study conveys a positive movement of Banglidesh stock market from weak form towards strong form of efficiency.

show abstract

“…Halonen, Pavlovia, and Pearson (2013) conducted a research in Swedish stock market and found that accounting information such as EPS and NAVPS are able to clarify a significant part of stock price. Riaz, Liu, and Khan (2015) also reported a statistically significant influence of EPS and BVPS on the MVPS. Omokhudu and Ibadin (2015) studied the VARI in Nigeria from 1994 to 2013 and concluded that in Nigeria accounting information like earnings, dividends, and cash flows are statistically significant and has the value relevance.…”

Section: Literature Reviewmentioning

confidence: 87%

Untitled

2021

Journal of Asian Business Strategy

0

View full text Add to dashboard Cite

This study intends to determine the Value relevance of accounting information (VRAI) that emphasizes the impact of different information produced by accounting on the market price of the share. This paper tries to determine the VARI on pharmaceutical companies' share price at the Dhaka Stock Exchange (DSE) of Bangladesh. For this purpose, I have collected data from different Pharmaceutical companies listed under the DSE for the period starting from 2017 to 2019. In this study correlation, ANOVA and regression analysis are applied to ascertain the association between Financial Accounting Information like Earnings per Share (EPS); Net Operating Cash Flow Per Share (NOCFPS); Net Asset Value Per Share (NAVPS); Cash Dividend Per Share (CDPS), and Stock Dividend Per Share (SDPS) and Market Value Per Share (MVPS). The results confirmed a statistically significant positive relationship of NOCFPS, NAVPS with MVPS. Differently, the results also confirmed a statistically significant negative relationship between EPS and MVPS. The results also ascertained that CDPS, and SDPS have no significant but positive relationship with MVPS. Finally I concluded that the information produced by accounting systems are value relevance and important in decision making. The existing literature of VRAI will enrich by results of this study. This study recommends the existing and potential investors to use accounting information for taking efficient and effective investment decisions. Contribution/ Originality:This study is one of the very few studies examining the VRAI on pharmaceutical companies listed in the DSE in Bangladesh. This research is one of the primary studies in Bangladesh in pharmaceutical sector. INTRODUCTIONThe VRAI is the importance of accounting information on investment decisions on stocks. Investors invest their capital and want to ensure that there principle amount and return on investment will come back quickly. Expectation of positive rate of return is an essential part of investment (Hossain, 2013). For this, before investing in stock, they want to know the ability and strength of the company. They need accurate information about the companies for making a proper decision. (Hossain, 2020b) argued that the key expectation of the investors is to make certain the getting back of investment along with return timely. The different financial reports and disclosures of the company are the main sources of information for the investors. Companies provide different accounting information timely for the investors concerned about the company's performance and present condition.

show abstract

The Value Relevance of Accounting Information and its Impact on Stock Prices: A Study on Listed Pharmaceutical Companies at Dhaka Stock Exchange of Bangladesh

Hossain

¹

2021

Journal of Asian Business Strategy

View full text Add to dashboard Cite

This study intends to determine the Value relevance of accounting information (VRAI) that emphasizes the impact of different information produced by accounting on the market price of the share. This paper tries to determine the VARI on pharmaceutical companies' share price at the Dhaka Stock Exchange (DSE) of Bangladesh. For this purpose, I have collected data from different Pharmaceutical companies listed under the DSE for the period starting from 2017 to 2019. In this study correlation, ANOVA and regression analysis are applied to ascertain the association between Financial Accounting Information like Earnings per Share (EPS); Net Operating Cash Flow Per Share (NOCFPS); Net Asset Value Per Share (NAVPS); Cash Dividend Per Share (CDPS), and Stock Dividend Per Share (SDPS) and Market Value Per Share (MVPS). The results confirmed a statistically significant positive relationship of NOCFPS, NAVPS with MVPS. Differently, the results also confirmed a statistically significant negative relationship between EPS and MVPS. The results also ascertained that CDPS, and SDPS have no significant but positive relationship with MVPS. Finally I concluded that the information produced by accounting systems are value relevance and important in decision making. The existing literature of VRAI will enrich by results of this study. This study recommends the existing and potential investors to use accounting information for taking efficient and effective investment decisions. Contribution/ Originality:This study is one of the very few studies examining the VRAI on pharmaceutical companies listed in the DSE in Bangladesh. This research is one of the primary studies in Bangladesh in pharmaceutical sector. INTRODUCTIONThe VRAI is the importance of accounting information on investment decisions on stocks. Investors invest their capital and want to ensure that there principle amount and return on investment will come back quickly. Expectation of positive rate of return is an essential part of investment (Hossain, 2013). For this, before investing in stock, they want to know the ability and strength of the company. They need accurate information about the companies for making a proper decision. (Hossain, 2020b) argued that the key expectation of the investors is to make certain the getting back of investment along with return timely. The different financial reports and disclosures of the company are the main sources of information for the investors. Companies provide different accounting information timely for the investors concerned about the company's performance and present condition.

show abstract

Exploring the Relationship between Market Value and Accounting Numbers of Firms in Pakistan

Cited by 4 publications

References 4 publications

Stock Price Adjustment to Corporate Accounting Disclosure: A Quantitative Study on Dhaka Stock Exchange (DSE), Bangladesh.

Stock Price Adjustment to Corporate Accounting Disclosure: A Quantitative Study on Dhaka Stock Exchange (DSE), Bangladesh.

Untitled

The Value Relevance of Accounting Information and its Impact on Stock Prices: A Study on Listed Pharmaceutical Companies at Dhaka Stock Exchange of Bangladesh

Contact Info

Product

Resources

About