Association of Accounting Information and Stock Price of Non-Banking Financial Institutions of Bangladesh

Abstract

Our study is intended to look into the association between accounting information and market stock price for the Non-Banking Financial Institutions (NBFI) listed on the Dhaka Stock Exchange. For this study purpose, we take 12 Non-Banking Financial Institutions (NBFI) out of 23 listed companies. For this study purpose, Ohlson ‘s (1995) basic valuation model has been used. Multiple and simple linear regression technology is used to ascertain the explanatory power of independent variables on the dependent variable. Data analysis is carried out in IBM SPSS v. 20 software. Estimated regression coefficients and adjusted R2 of accounting information are tested in this model. Here we take Earning per share (EPS), Return on Asset (ROA), Return on Equity (ROE), and Book Value (BV) per share are independent variables and Market share price as the dependent variable. Findings from this study indicate that all the independent variables have the influencing power in forecasting the share prices. From the individual effect analysis, it is clear that EPS and ROA are the most influential variables for determining the stock price for this selected industry. Thus, among the four independent variables EPS and ROA are considered the most value-relevant accounting information for equity investors.