Is there any effect of accounting information on stock prices? Evidence from top 20 firms listed in FBM KLCI
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Date
2010
Authors
Wan, Juen Keong
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Abstract
The main purpose of this study is to empirically examine the relationship between
share price and the net book value, earnings per share and dividends per share, based
on the framework of Ohlson model, which is the extension of residual income model.
The study also attempts to examine whether the inclusion of the linear information
dynamics besides the accounting variables will increase the explanatory power of the
model. The findings show that the residual income model, and the Ohlson model in
particular, forms a useful framework for exploring empirical relationships between
share prices and accounting information. The findings also suggest that the model
should be further tested using the composite measures, that is return on equity and
dividend per equity, rather than focus on equity, earnings and dividends, as separate
measures, to confirm whether using ROE and dividend per equity as the explanatory
variables could improve the model.
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Keywords
Business Administration , FBM KLCI