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Relation between Accounting Choices, Book Values and Stock Prices
University of Skövde, School of Technology and Society.
2008 (English)Independent thesis Advanced level (degree of Master (One Year)), 10 credits / 15 HE creditsStudent thesis
Abstract [en]

This study examines the relationship between stock prices and accounting figures, primarily the book value of equity and earnings, as well as the market perception of accounting choices implemented by

companies. Market event studies from late sixties have initiated numerous of researches, and the majority of contemporary results were consistent with strong belief in the market efficiency theory. The

book value of equity and earnings have been proved to have the highest explanatory power of future stock prices. Other accounting-related issues, like inventory methods or accounting for business combination, were proven to have reliable impact on the stock prices. Moreover, the cash flow implications triggered by the accounting change are not an indispensable condition to influence the stock price level. Although a great body of research has treated the relationship between accounting

choices and stock prices, a clear-cut mechanism is not well specified. The evidence is inconsistent, and the consequences of accounting change are difficult to measure. However, the accounting figures

included in financial statements remain the most important measure of the companies’ performance. Due to the economic and technical progress, which considerably modified the structure of companies

and the environment in which they operate, further studies are advisable in order to maintain the reliability of accounting figures on significant level.

Place, publisher, year, edition, pages
Skövde: Institutionen för teknik och samhälle , 2008. , 43 p.
Keyword [en]
equity book value, earnings, accounting choice, stock prices
National Category
Economics
Identifiers
URN: urn:nbn:se:his:diva-1303OAI: oai:DiVA.org:his-1303DiVA: diva2:2444
Presentation
(English)
Uppsok
samhälle/juridik
Supervisors
Examiners
Available from: 2008-06-19 Created: 2008-06-19 Last updated: 2009-05-15

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CiteExportLink to record
Permanent link

Direct link
Cite
Citation style
  • apa
  • harvard1
  • ieee
  • modern-language-association-8th-edition
  • vancouver
  • Other style
More styles
Language
  • de-DE
  • en-GB
  • en-US
  • fi-FI
  • nn-NO
  • nn-NB
  • sv-SE
  • Other locale
More languages
Output format
  • html
  • text
  • asciidoc
  • rtf