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The accounting value relevance of earnings and book value: Tunisian banks and financial institutions

Ali Ahmadi (Faculty of Economics and Management, University of Sfax, Tunisia)
Abdelfettah Bouri (Faculty of Economics and Management, University of Sfax, Tunisia)

International Journal of Law and Management

ISSN: 1754-243X

Article publication date: 12 March 2018

Issue publication date: 12 March 2018

986

Abstract

Purpose

As an increasing number of business organizations around the world are engaged in the value relevance of accounting information, this study aims to assess the field of the accounting value relevance of book value and earnings in share prices of banks and financial institutions listed in the Tunisian stock exchange.

Design/methodology/approach

Using a sample of available banks and financial institutions listed in the Tunisian Stock Exchange from 2010 to 2015, this paper accommodates the documented accounting information in an emergent market context by using stock price of three months after year-end as a dependent variable. This study uses the panel regression technique on 24 banks and financial institutions during the study period.

Findings

The authors find that earnings and book value are statistically significantly associated with firm value. Also, using these variables together is positively related to the firm stock price share. Comparatively, these obtain evidence that book value is statistically more value-relevant than earning per share models; expectedly, the earnings explain a higher proportion of the stock price for the group of financial institutions than the group of banks.

Originality/value

A Web-based search is performed during the second quarter of 2016, locating the corporate websites of the sample firms, and the official site of the Datastream (worldscope) is identified. The sample period is 2010-2015 (144 firm-year observations).

Keywords

Citation

Ahmadi, A. and Bouri, A. (2018), "The accounting value relevance of earnings and book value: Tunisian banks and financial institutions", International Journal of Law and Management, Vol. 60 No. 2, pp. 342-354. https://doi.org/10.1108/IJLMA-11-2016-0131

Publisher

:

Emerald Publishing Limited

Copyright © 2018, Emerald Publishing Limited

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