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Does institutional ownership affect the value relevance of accounting information?

Mohamed Omran (International Business School Suzhou, Xi'an Jiaotong-Liverpool University, Suzhou, China)
Yasean A. Tahat (Accounting and MIS Department, Gulf University for Science and Technology, Mishref, Kuwait)

International Journal of Accounting & Information Management

ISSN: 1834-7649

Article publication date: 6 March 2020

Issue publication date: 11 April 2020



Drawing upon agency theory, this study aims to assess the value relevance (VR) of accounting information released by non-financial firms listed on the Kuwait stock exchange for the period of 2015-2018. Also, the influence of institutional ownership level and other explanatory variables, namely, book value per share, earnings per share, growth in assets and changes in financial leverage on share prices is examined.


To test the hypotheses, the Ohlson (1995) model is extended. This study uses panel data analysis and applies appropriate statistical techniques to measure empirical relationships.


The results show that the VR of accounting information released by the Kuwaiti non-financial listed firms varies over the period of 2015-2018. Book value and earnings have significant and positive effects on share prices. In recent years, the VR of book value information has been growing, while that of earnings information has been declining. Institutional ownership level has a significant and positive influence on the VR of accounting information released by the Kuwaiti non-financial listed firms. The findings confirm a positive power, signalling growth in assets regarding the share prices. However, no significant relationship between changes in financial leverage and share prices is found.

Practical implications

The findings of the study provide evidence of the linkage between VR and institutional ownership level, which promotes the understanding of the influence of institutional investors on a firm’s market value. Empirical evidence from Kuwait will have international implications and can serve as a guide for accounting researchers studying other emerging markets. Capital market regulators can provide guidelines in the form of information characteristics and elements of financial statements that need improvement. Finally, the findings assist non-financial listed firms to enhance the quality of accounting information by identifying the strengths and weaknesses in their financial reports.


This study extends the previous literature by investigating a relatively new set of data in more depth than that has been examined by prior research, which focusses on the relationship between accounting information and the firm’s market value.



Omran, M. and Tahat, Y.A. (2020), "Does institutional ownership affect the value relevance of accounting information?", International Journal of Accounting & Information Management, Vol. 28 No. 2, pp. 323-342.



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