Title: Value relevance of reported financials of NSE listed companies

Authors: Mwila J. Mulenga; Meena Bhatia

Addresses: Institute of Finance Management (IFM), Shaaban Robert Street, P.O. Box 3918, Dar es Salaam, Tanzania ' Birla Institute of Management Technology, Plot No.5, Knowledge Park II, Greater Noida – 201 306, India

Abstract: The purpose of this paper is to examine value relevance of accounting information in Indian stock market. The study focuses exclusively on the listed firms under Nifty 100 from 2001 to 2015, and uses price and returns models. The findings under both models suggest that accounting information has the significant ability in influencing stock prices and stock returns during the entire period covered by this study. Further analysis shows that book value per share is more relevant for loss-making firms while earnings per share are more relevant for profit-making firms. Based on industry classification, the value relevance of accounting information reported is high in metal industry, infrastructure, energy, financial services, automobiles and services industry and low in consumption and pharma industry. Study concludes that accounting information is relevant for investment decisions and investors must focus on this information to make informed investment decisions.

Keywords: accounting information; value relevance; stock market; price model; returns model; NSE; India; metal industry; infrastructure; energy; financial services; automobiles; services industry; loss making firms; profit making firms.

DOI: 10.1504/AAJFA.2020.108242

Afro-Asian Journal of Finance and Accounting, 2020 Vol.10 No.3, pp.295 - 319

Received: 16 Feb 2018
Accepted: 21 Aug 2018
Published online: 07 Jul 2020 *

Full-text access for editors Full-text access for subscribers Purchase this article Comment on this article