Using statistical analysis to investigate the relevance of accounting information in emerging financial markets: an empirical study

Author
Belassi, Walid
Elbarrad, Sherif
Faculty Advisor
Date
2020
Keywords
financial markets , emerging financial markets , accounting , finance , relevance of accounting information
Abstract (summary)
Despite extensive literature and numerous published work on the area of value relevance of accounting information, a major part of the studies have been conducted on large and developed capital markets. While there are a number of published articles in the area of value relevance of accounting information in developing markets, there is still a need to investigate more developing markets to see if there are similarities or different attributes of each market that could shed more light on the importance and usefulness of accounting relevance in developing markets. To study further the gap of accounting relevance in developing markets, this study investigates the relationship between the accounting information – represented in the financial ratios, F-Score, M-Score, in addition to market-related measures – and stock price represented in the ratio of Price to Book Value (PBV) per share and Price-Earnings (PE) Ratio. In order to shed light on the significant variables that affect the stock price in emerging markets, this study examines the cement sector in Saudi Arabia. The results of the study indicate that F-score, inventory turnover, current ratio, debt-to-equity ratio, return on assets, and average trading are significant determinants of PBV. Combined, they explain 75.1% of the variations in PBV. The study also shows that F-score and inventory turnover are significant determinants of PE. Combined, they explain 23.1% of the variations in PE.
Publication Information
Belassi, W., & Elbarrad, S. S. (2020). Using statistical analysis to investigate the relevance of accounting information in emerging financial markets: An empirical study. Asian Social Science, 16(6). DOI: 10.5539/ass.v16n6p1
DOI
Notes
Item Type
Article
Language
English
Rights
Attribution (CC BY)