Analytical Review of Relation between Changes of Income Statement Items and Stock Price Changes
Faculty of Admin. Sciences & Econ. Journal, University of Isfahan. 19(1), 55-74, 2007
20 Pages Posted: 4 May 2013
Date Written: May 1, 2007
Most of the investors believe that publishing financial statement and accounting earnings will transfer information to the capital market and this information will effect on price and stock transaction amounts. Accountants were always concern about questions such as: Whether is a practical relation between components of accounting earning and stock price or not? Whether earning announcement has the effect on stock price and transferring information to the capital market or not? And generally, whether or not these earning announcements have the efficient information about stock price? In this study we review the affect of the changes in income statement items on the changes of stock price in Tehran stock exchange. So we review six cases of income statement items that commonly are reported in related to stock price. We will test seven hypotheses for each income statement changes and stock price. In order to test the research hypotheses we use the correlation coefficient test between mentioned changes and the ratio test in population. Our sample is consist of 55 companies from different accepted industries in Tehran stock exchange and our testing period is from 1376 until 1381. Results of this study show that income statement items have efficient information and investors react to it and stock price would adjust very fast. It means that changes in these accounting numbers have effected on stock price, so income statement is a good and up to date source of information which strongly effect on price and amount of stock transaction.
Note: Downloadable document is in Arabic.
Keywords: Stock Price, Income, Operating Expenses, Gross Margin
JEL Classification: M20, M40
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