Abstract
The paper examines whether company's characteristics, namely, stockholders number, listing status and company's age affect its accounting information relevance and which stock price measure, among average price, closing price and after three months price, is more dependable in pointing out the accounting information value relevance for a sample consists of 91 companies in the services and industrial sectors in Jordan within 2004-2013. Using price model, it is found that companies with larger stockholder numbers, listed on Amman Stock Exchange primary market, and that are older in age yield greater value relevance for per share earnings and book value. Book value has the greatest value relevance being the best predictor for firm value, while cash flows showed insignificant results. Finally, we concluded that closing price is the most dependable among the three stock price measures in detecting the accounting information value relevance in Jordan. The paper presents the ability of valuation theory/model to interact with other theories by including the effect of non-accounting information on the accounting information value relevance. Our findings might present evidence that can serve the educational institutions in their courses and provide a guideline to investors, managers and financial analysts to better summarize the firm value.
Highlights
A previous study found that the financial disclosure can be affected by stockholders number, listing status and company’s age [5]
Since different measurements for stock price have been used in literature and following previous valuation studies [30, 31], this study examines the effect of the selected non-accounting information on the accounting information value relevance regarding three measures for stock price which are average price, closing price, and after three months price to indicate which stock price measure is more dependable in presenting the above accounting information relevance
Since this study aims to examine whether the earnings, book value and cash flows relevance is affected by company’s stockholders number, listing status and age, the relationships among study variables are hypothesized in accordance with the three stock price measures as follows: H1a: Earnings, book value and cash flows regarding average price are more relevant in companies with larger stockholders number
Summary
A previous study found that the financial disclosure can be affected by stockholders number, listing status and company’s age [5]. To extend previous studies, we examine the effect of stockholders number, listing status and a company’s age on per share earnings, book value and cash flows relevance that is not well researched for Jordanian services and industrial sectors. On the value relevance of accounting information, those studies examined the effect of mandated accounting disclosure, legal environment, source of accounting standards and liberalization [7], forging and local stockholders number [29], foreign ownership and trading volume [30], financial disclosure level and time [31] and industry type [32]. This study extends the valuation research in Jordan to include the effect of stockholders number, listing status and company’s age on the value relevance of companies’ accounting information
Sign-in/Register to view highlights & summary Sign-in/Register to access full text options 
Free) 
Talk to us
Join us for a 30 min session where you can share your feedback and ask us any queries you have
Schedule a call
