The impact of institutional ownership on the value relevance of accounting information: evidence from Egypt

Abstract

Purpose

This paper aims to examine the value relevance (VR) of accounting information (AI) presented by Egyptian listed non-financial companies. Further, the study investigates the influence of institutional ownership on the value relevance of AI in a developing market, namely, the Egyptian market.

Design/methodology/approach

The study uses data from 2014 to 2017 with a total of 248 observations and analyses the data using regression analysis. Data are collected from the nonfinancial companies listed on the Egyptian Stock Exchange.

Findings

The authors found that the AI reported by the Egyptian listed non-financial companies is value relevant. Regarding the influence of institutional ownership, it is found to significantly impact the VR of AI reported by the sample companies. This model investigated the effect of corporate size and financial leverage as controlling variables and found that they have an insignificant influence on the VR of AI.

Originality/value

The current study findings enrich the literature by enhancing the understanding regarding institutional owners’ impact on corporate value. Further, bringing evidence from an emerging market can have implications for accounting researchers interested in addressing other emerging markets with similar contextual and institutional environments.

Citation

Diab, A., Abdelazim, S.I. and Metwally, A.B.M. (2023), "The impact of institutional ownership on the value relevance of accounting information: evidence from Egypt", Journal of Financial Reporting and Accounting, Vol. 21 No. 3, pp. 509-525. https://doi.org/10.1108/JFRA-05-2021-0130