The value relevance of accounting information: empirical evidence from Jordan

Abstract

Purpose

This empirical study’s primary goal is to examine the connection between accounting information and share price for financial companies listed on Jordan’s expanding Amman Stock Exchange (ASE) between 2014 and 2018.

Design/methodology/approach

The correlation between accounting data and share price was investigated using multiple regression analysis. In this vein, “pooled ordinary least squares (OLS), fixed effect and random effect” static panel data estimators were used. The OLS model was chosen as the best model after a series of diagnostic tests.

Findings

The multiple proxies of accounting information value relevance have a positive and considerable impact on the market value per share, according to panel data research. Comparatively, the authors find proof that among the other accounting data – earnings, dividends and cash flow from operations – book value is statistically the most value-relevant.

Research limitations/implications

This empirical investigation was only conducted in Jordan. Because it is very likely to obtain different results in other nations, the findings cannot be applied to other business environments.

Practical implications

The findings of this paper may highlight the amazing relationship between accounting information and share price for policymakers, regulators and other stakeholders in developing nations, notably in Jordan. This could pave the way for effective accounting disclosures.

Originality/value

Seldom does empirical research on the relationship between accounting data and share prices from publicly traded companies on ASE exist. So, by demonstrating empirical findings from Jordanian companies, this study fills the gap in the existing literature and knowledge.

Citation

Abdelrahim Ahmad Khader, O. and Shareif Hussein Shanak, H. (2023), "The value relevance of accounting information: empirical evidence from Jordan", International Journal of Law and Management, Vol. 65 No. 4, pp. 354-367. https://doi.org/10.1108/IJLMA-11-2022-0247