January 2021 Vol. 9 No.1

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Original Research Article

Influence of Company Specific Characteristics on the Value Relevance of Accounting Information in Bangladesh

Dr. Md. Hasan Uddin

Department of Finance and Banking, Faculty of Business Administration and Management, Patuakhali Science and Technology University, Dumki, Patuakhali-8602, Bangladesh

Email: hasan14860@pstu.ac.bd
Mobile: +8801812076429

Received: 19 September 2020  I  Accepted: 24 November 2020  I  Published: 28 January 2021  I    Article ID: MRJBM-20-025
Copyright © 2020 Author(s) retain the copyright of this article.
This article is published under the terms of the Creative Commons Attribution License 4.0.

Abstract

The purpose of this study is to examine the influence of company-specific characteristics, namely, stockholders’ number, and the company’s age on the value relevance of accounting information. Value-relevance is measured by the adjusted R2 derived from a regression of stock price on EPS, BVPS, and CFPS using the price model. The study sample included 71 manufacturing companies listed with Dhaka Stock Exchange (DSE) in Bangladesh within the period 2000-2017. The results of this study showed that earnings (EPS), book value (BVPS), and cash flow (CFPS) are value relevant to the share price. The explanatory power of the extended model also shows significant improvement when compared with the baseline regression model where the stock price is regressed on EPS, BVPS, and CFPS but fails the test of significance. At long last, the end thus is that the company-specific characteristics have not achieved a more grounded relationship of accounting information and share price for the manufacturing sector in Bangladesh. The paper presents the ability of valuation theory/model to interact with other theories by including the influence of non-accounting information on the accounting information value relevance. This study may introduce proof that can serve the educational institutions in their courses and provide a guideline to investors, managers and financial analysts to better summarize the firm value. This research likewise makes windows for future studies toward this path for different segments.

Keywords: Value relevance, Accounting information, Company-Specific Characteristics, Manufacturing Sector and Bangladesh