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The IUP Journal of Accounting Research and Audit Practices:
Value Relevance of Accounting Information: An Empirical Study on Construction Companies Listed on Bombay Stock Exchange
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This study aims at providing empirical evidence related to value relevance of earnings per share, book value per share, dividend per share, price-to-book value per share, cash flow from operations, net worth and assets turnover ratio on the share price of construction contract of real estate companies listed on Bombay Stock Exchange (BSE). The study is conducted using secondary data. Two panel data techniques, i.e., fixed-effect model and random effect model, are employed to examine the value relevance of accounting information in construction companies listed on BSE. Earnings per share and price-to-book value per share are reported to have positive and statistically significant relationship with share price.

 
 
 

Accounting information provided by financial statement is required to serve different users for a variety of decisions. While different users have different needs for the accounting information of the organization, an investor is definitely expected to look into the financial performance of the company before deciding to invest in it. The decision of the investors is reflected in the stock price movement. Stock prices can also be referred to as market price of shares. After investment, it is the right of the stockholder to be aware as to how his investment is being utilized. Thus, there is lot of emphasis by Companyís Act and SEBI on transparency in financial practices for specially listed companies.

Value relevance of accounting information is the ability of accounting numbers in influencing equity share price of listed companies. Accounting information is defined as value relevant if it has a predicated association with equity market values, i.e., stock returns (Sharma et al., 2012). Value relevance studies are designed to assess whether particular accounting figures reflect information that is used by investors in valuing firmsí equity (Barth et al., 2001).

 
 
 

Value Relevance of Accounting Information, An Empirical Study on Construction Companies