Value Relevance of Accounting Information: Evidence from India
Baisakhi Vohra
*
Ganpat University, Mehsana, Gujarat, India.
Kundan Patel
V.M. Patel College of Management Studies, Ganpat University, Mehsana, Gujarat, India.
Abhishek Parikh
School of Arts and Management Studies, P.P. Savani University, Surat, Gujarat, India.
*Author to whom correspondence should be addressed.
Abstract
This research presents an empirical analysis of the value relevance of earnings, book value, and various other financial performance metrics for the top 30 companies listed on the BSE SENSEX index in India, covering the period from 2015 to 2019. The theoretical framework underpinning this study is centered on the concept of value relevance of financial performance indicators. This study aims to assess the extent to which a company’s stock price is influenced by different financial performance measures. To explore these relationships, two robust regression models have been utilized: the Ohlson-Price Model and the Multiple Linear Regression. The findings of the study indicate that using the Ohlson-Price Model, when analyzed individually, earnings per share (EPS) has greater value relevance than book value per share (BVPS). When analyzed collectively, EPS and BVPS explain 55.86% of the variation in stock price, corroborating previous research findings. Additionally, results from the multiple regression model identify dividend yield (DY) as the most significant determinant affecting stock prices.
Keywords: Value relevance, financial performance, Ohlson-price model, regression analysis, India