Investigating the value relevance of accounting information using the CART method: a study in the Tehran Stock Exchange

Subject Areas :

Norallah Khodadadi ¹ , Mehrdad Ghanbari ^{2 *} , Babak Jamshidinavid ³ , Javad Masoudi ⁴

1 - Accounting doctoral student, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran.
2 - Assistant Professor, Department of Accounting, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran (Corresponding Author)
3 - Assistant Professor, Department of Accounting, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran.
4 - Assistant Professor, Department of Accounting, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran.

Received: 2024-08-03 Accepted : 2024-09-30 Published : 2024-11-06

Keywords: Value relevance, classification and regression trees, intangible assets, growth opportunities, alternative performance measures.,

Abstract :

Objective: The purpose of this study is to determine the importance and ranking of the value relevance of accounting variables in predicting stock prices using an advanced non-parametric method.

Research Methodology: This research was conducted using the Classification and Regression Tree (CART) method on data from 93 companies listed on the Tehran Stock Exchange from 2000 to 2019. SPSS and R software were used for data analysis.

Findings: The results showed that net profit, distributable profit, book value, and operating cash flows have the highest value relevance in determining stock prices, respectively. In contrast, the value relevance of R&D expenses and other comprehensive income was found to be zero.

Originality/Scientific Value Added: By employing the non-parametric CART method, which can uncover non-linear relationships, this research provides a novel perspective on the hierarchy of importance of accounting information for investors in the Iranian capital market.

References:

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