The Impact of Global Financial Crisis on the Value Relevance of Accounting Information

Iqra Shahbaz¹

Section:Research Paper, Product Type: Journal-Paper
Vol.7 , Issue.2 , pp.8-17, Dec-2019

Online published on Dec 31, 2019

Copyright © Iqra Shahbaz . This is an open access article distributed under the Creative Commons Attribution License, which permits unrestricted use, distribution, and reproduction in any medium, provided the original work is properly cited.
 

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Abstract :
This study addressed two diverse areas of investigation, value relevance of the accounting data (is the statistical interpretation of the accounting data in stock prices) and its connection to the Global Financial Crisis by employ sample of 81 enterprises scheduled in Pakistan Stock Exchange from textile sector for the period 2003-2015.Firstly, it is investigated either the accounting data is value relevant or not in Pakistan during 2003- 2015. The results describe during the investigating period the accounting data is significant in Pakistan. Secondly, the other intention of this cram is to investigate either the Global Financial Crisis affect the accounting data in Pakistan. The results show the troubling event has effects the credibility of the books of accounts in Pakistan. In respect to this event book value is value relevant pre and post crisis which emphasis on that in bad time’s stock prices has high correlation with the information substance of book value as it seem the proxy of an abandonment option. In respect to earnings, it is stated that earnings is value relevant throughout the investigating phase. There is a decline in significance of earnings subsequent to the Global Financial Crisis. This is by reason of the enterprises having negative and extra ordinary items during bad times.

Key-Words / Index Term :
Value relevance, earnings, and book value of equity, international Financial Crisis and stock prices

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