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Value relevance of financial reports and macroeconomic factors in defining stock price: evidence from Indian stock markets

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  • Ravi Kumar Jain
  • K.P. Venugopala Rao

Abstract

The aim of this study is to investigate the causality of the accounting information reported as per Indian Accounting Standards (Ind AS) adopted by the Indian companies from the accounting year 2016-2017 and the other non-accounting information. This paper examines the value relevance of accounting information for companies listed on NSE using the vector auto regression model on the panel data for 2017-2019. The study suggests that the earnings per share, gross domestic product and the industrial index of production have significant explanatory power and had a causation effect on the market price of the shares of the companies. Whereas, the accounting information of book value per share and the net cash flow from investing activities had no explanatory power. The economic indicators occupied a key position in determining the market price of the shares.

Suggested Citation

  • Ravi Kumar Jain & K.P. Venugopala Rao, 2022. "Value relevance of financial reports and macroeconomic factors in defining stock price: evidence from Indian stock markets," International Journal of Business Innovation and Research, Inderscience Enterprises Ltd, vol. 29(3), pages 406-416.
    • Handle: RePEc:ids:ijbire:v:29:y:2022:i:3:p:406-416
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