The trend of relevance of value of accounting information: a study on pharmaceutical companies listed in the Tehran Stock Exchange
Social Determinants of Health,
Vol. 9 (2023),
1 January 2023
,
Page 1-12
https://doi.org/10.22037/sdh.v9i1.40365
Abstract
Background: Financial statements are one of the main ways for companies to communicate in order to provide financial and non-financial information to their stakeholders. The purpose of this research was to investigate the relevance of accounting information value. It was for pharmaceutical companies active in Tehran Stock Exchange.
Methods: This descriptive-correlational study was conducted on 26 pharmaceutical companies admitted to the stock exchange during the period of 2000 to 2019. The method of collecting information was based on two library models and the information included in the financial statements of the companies. To estimate the value relevance of accounting information in this study, the non-parametric method of classification and regression tree (CART) was used, which automatically includes non-linear relationships and interactions between variables, and simple linear regression was used to test the trend of value relevance.
Results: The results showed that the trend of relevance of the composite value of accounting information increased during the research period for pharmaceutical companies, but it was not statistically significant. The results of the relevance of the value of single variables show a decrease in the relevance of the value of known intangible assets, which includes goodwill and software, and an increase in the relevance of the value of alternative performance measures for pharmaceutical companies.
Conclusion: The relevance of the accounting information value of pharmaceutical companies allows investors to easily adjust their investment strategies in the Bahadra Stock Exchange and make informed decisions to achieve their goals and allocate resources to more profitable investments.
- Economics, Pharmaceutical
- Financial Statements
- Standards
How to Cite
References
Francis J, Schipper K. Have financial statements lost their relevance?. Journal of Accounting Research. 1999;37(2):319-352. https://doi.org/10.2307/2491412
Barth ME, Clinch G. Scale Effects in Capital Markets-Based Accounting Research. Journal of Business Finance & Accounting. 2009;36(3):253-288. https://doi.org/10.1111/j.1468-5957.2009.02133.x
Donelson DC, Jennings R, McInnis JM. Changes Over Time in the Revenue-Expense Relation: Accounting or Economics?. Accounting Review. 2011;86(1):945-974. https://ssrn.com/abstract=1446924
Srivastava A. Why have measures of earnings quality changed over time?. Journal of Accounting and Economics. 2014;57(2):196-217. https://doi.org/10.1016/j.jacceco.2014.04.001
Hayn C. The information content of losses. Journal of Accounting and Economics. 1995;20(2):125-153. https://doi.org/10.1016/0165-4101(95)00397-2
Lev B, Sougiannis T. The Capitalization, Amortization and Value Relevance of R&D. Journal of Accounting and Economics. 1996;21(1):107-138. https://doi.org/10.1016/0165-4101(95)00410-6
Brown S, Lo K, Lys T. Use of R2 in Accounting Research: Measuring Changes in Value Relevance over the Last Four Decades. Journal of Accounting and Economics. 1999;28(2):83-115. https://doi.org/10.1016/S0165-4101(99)00023-3
Collins DW, Pincus M, Xie H. Equity Valuation and Negative Earnings: The Role of Book Value of Equity. Accounting review: A quarterly journal of the American Accounting Association. 1999;74(1):29-61. https://doi.org/10.2308/accr.1999.74.1.29
Morris JJ, Alam P. Value relevance and the dot-com bubble of the 1990s. The Quarterly Review of Economics and Finance. 2012;52(2):243-225. https://doi.org/10.1016/j.qref.2012.04.001
Ohlson JA. Earnings, Book Values, and Dividends in Equity Valuation: An Empirical Perspective. Contemporary Accounting Research. 2001;18(1):107-120. https://doi.org/10.1111/j.1911-3846.1995.tb00461.x
Ciftci M, Darrough MN, Mashruwala R. Value Relevance of Accounting Information for Intangible-Intensive Industries and the Impact of Scale: The US Evidence. European Accounting Review. 2014;23(2):199-226. https://doi.org/10.1080/09638180.2013.815124
Lev B, Zarowin P. The Boundaries of Financial Reporting and How to Extend Them. Journal of Accounting Research. 1999;37(2):353-385. https://doi.org/10.2307/2491413
Beislund LA. A Review of the Value Relevance Literature. The Open Business Journal. 2009;2(1):7-27. https://doi.org/10.2174/1874915100902010007
Olhson JA, Feltham G. Valuation and Clean Surplus Accounting for Operating and Financial Activities. Contemporary Accounting Research. 1995;11(1):689-731. https://doi.org/10.1111/j.1911-3846.1995.tb00462.x
Bhatia M, Mulenga MJ. Value Relevance of Accounting Information: A Review of Empirical Evidence Across Continents. Jindal Journal of Business Research. 2019;8(2):179-193. https://doi.org/10.1177/2278682118823307
Abayadeera N. Value relevance of information in high-tech industries in Australia: financial and nonfinancial. Ph.D. Thesis, School of Accounting, Faculty of Business and Law, Victoria University, Melbourne, Australia;2010. https://vuir.vu.edu.au/15977/
Ahmadpour A, Hadian SA. Examining changes in the relevance of accounting information. Accounting and Auditing Reviews. Faculty of Management, University of Tehran. 2015;2(1):1-20. https://doi.org/20.1001.1.26458020.1394.22.1.2.9
Faghani Makrani Kh. Relationship between book value, accounting profit and cash flow with stock price. Management Accounting Quarterly. 2016;24(8):43-59. https://jma.srbiau.ac.ir/article_6505.html?lang=en
Hamdi K, FaalQayyumi A, BorzozadehZavareh M, Taghikhani N. Relevance of the value of accounting information and the factors affecting it. Financial Accounting and Auditing Research. 2013;19(5):176-193. https://doi.org/20.1001.1.23830379.1392.5.19.8.7
Setayesh MH, Rezaei G, Kobriaei AA. Relevance of accounting data and the factors affecting it. Accounting Reviews. 2015;3(1):41-61.
Khani A, Sadeghi M, MohammadiHoleh Soo M. The effect of research and development costs on the stock returns of pharmaceutical companies operating in the Tehran Stock Exchange. Financial Accounting. 2015;6(21):153-174. http://qfaj.mobarakeh.iau.ir/article-1-116-fa.html
- Abstract Viewed: 34 times
- PDF Downloaded: 32 times