The Accounting Variable and Stock Price Determination

Abstract

Several tests have been conducted to determine which valuation model best fits stock price data. Given very little success, those studies suggest the need for a clear understanding of the market process of stock price determination. This paper advances the concepts of product costing and product pricing, which pertain to financial accounting valuation and the stock market price determination, respectively. This research effort presents a workable hypothesis of stock price determination.

Industry-specific determinants of shareholder value creation

“…Studies which found economic-based measures to be more useful rather than accounting-based variables included studies by Stewart (1991Stewart ( , 1994, Stern (1993), Milunovich and Tsuei (1996), O'Byrne (1996), Bacidore et al (1997), Dodd (1997, 2001), Hall (1999), Worthington and West (2004), Chmelikova (2008) and Lee and Kim (2009). By contrast, studies by Biddle et al (1997), Salvaiy (1997), Bao and Bao (1998), De Villiers and Auret (1998), De Wet (2005, Ismail (2006), Maditinos et al (2006Maditinos et al ( , 2009, Kyriazis and Anastassis (2007), Erasmus (2008), Kumar and Sharma (2011), Arabsalehi and Mahmoodi (2012), Abdoli et al (2012), Mollah et al (2012), Hall (2013) and Alloy Niresh and Alfred (2014) found that accounting-based variables performed better in explaining shareholder value creation than economic-based measures. It falls beyond the scope of this study to discuss the results of the abovementioned studies in more detail, but it is important to point out that the inconsistencies of their results may lead managers, investors, shareholders and researchers to ask the following questions:…”

Financial Events Occurring After the Balance Sheet Date Within the Framework of IAS/TMS 10 Standard and a Suggestion

“…In this way, the data necessary for the measurement of business performance is obtained. (Salvaiy, 1998).…”