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Impact of Accounting Information on Share Price: Empirical Evidence from Pakistan Stock Exchange

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  • Muhammad Asif
  • Kashif Arif
  • Waqar Akbar

Abstract

Purpose¡ªThe purpose of this paper is to examine the relationship between accounting information and share price. In order to achieve this, a model that includes specific accounting ratios (earning per share, book value per share, capital employed per share and operating cash flow per share) and shares a price is developed. Design/methodology/approach¡ªThe data were collected from the companies listed in KSE-30 index. The time frame spans from 2006 to 2013 and OLS regression models were used to examine the relationships Findings¡ªThe resulting evidence suggest that accounting information parameters have significant influence on share price and they have joint explanatory power in determining stock prices. This research finds the consistent results with pervious empirical researches. Originality/value¡ªThe present study adds to the existing literature by examining the impact of accounting information on share prices within the context of an emerging capital market such as Pakistan Stock Exchange using KSE-30 companies. This is believed to be the first study which considers the aforementioned issues in the Pakistan¡¯s capital market environment.

Suggested Citation

  • Muhammad Asif & Kashif Arif & Waqar Akbar, 2016. "Impact of Accounting Information on Share Price: Empirical Evidence from Pakistan Stock Exchange," International Finance and Banking, Macrothink Institute, vol. 3(1), pages 124-135, June.
  • Handle: RePEc:mth:ifb888:v:3:y:2016:i:1:p:124-135
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    References listed on IDEAS

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    1. Chen, Peter & Zhang, Guochang, 2007. "How do accounting variables explain stock price movements? Theory and evidence," Journal of Accounting and Economics, Elsevier, vol. 43(2-3), pages 219-244, July.
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    Keywords

    Accounting Information; EPS; BV; CE; OCF; Share price;

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