1
Full Prof. Accounting, Faculty of Management & Economics, Tarbiat Modares University, Tehran, Iran
2
Ph.D. in Accounting, Faculty of Management & Economics, Tarbiat Modares University, Tehran, Iran
Abstract
Value relevance explains the relationship between accounting information and price or return of stocks. Value relevance studies measure usefulness of accounting information from the viewpoint of investors. Price regression and return regression are used to study value relevance of balance sheet numbers and earnings numbers, respectively. The coefficient obtained from the latter regression measures price to earnings sensitivity, which is called earnings response coefficient. Value relevance is one of the characteristics of earnings quality that other characteristics improve or deteriorate it. Both accounting numbers and behavioral bias from investors can affect this relationship.
