The Information Content of Accounting Variables in Companies Accepted in Tehran Stock Exchange (TSE)

Subject Areas : International Journal of Finance, Accounting and Economics Studies

Received: 2011-04-02 Accepted : 2011-06-10 Published : 2011-06-10

Keywords: Stock Return, Relative Information Content, Incremental Information Conten,

Abstract :

Various researches have been carried out about benefits of accounting information and their influence on decision making of financial statements users. For example, many researches have examined the relationship between accounting variables and stock returns or stock price. This study determines and compares the relative and incremental content of accounting variables, too. For this purpose, the relationship between stock return and accounting variables is examined for production companies accepted in Tehran Stock Exchange (TSE), during period of 2000 through 2004. Independent variables, in this study, are Net Income (NI), Operational Profit (OP) and Cash Flows from Operations (CFO) and dependent variable is annual Stock return. In order to eliminate the effect of company size, we choose total asset as control variable. The results show that OP has related information content in comparison with other variables and NI and OP have incremental content beyond each other, but CFO doesn’t have incremental content.