Value relevance of earnings: Evidence from Middle Eastern and North African Countries

Document Type

Article

Publication Date

12-1-2010

Abstract

Researchers as well as regulators are increasingly more interested in enhancing their understanding of the factors that influence value relevance of reported earnings in financial statements. In the light of globalization and increased exposure to international accounting practices, a better comprehension of factors contributing to or reducing value relevance of earnings is essential. This paper investigates the value relevance of earnings and its components for a number of Middle Eastern and North African (MENA) countries. Additionally, the paper examines how differences in levels of mandated disclosures, source of accounting standards, and legal systems moderate the informativeness of earnings to investors. We find that mandated disclosure and source of accounting standard, (especially non-governmental source) are positively associated with earnings informativeness. Additionally, MENA countries with French civil law and systems have lower value relevance relative to countries in our sample with English and related legal codes. Further, the firms that have adopted international financial reporting standards have higher value relevance than firms in MENA countries which adhere to local standards. © 2010 Elsevier Ltd.

Identifier

77957864704 (Scopus)

Publication Title

Advances in Accounting

External Full Text Location

https://doi.org/10.1016/j.adiac.2010.08.007

ISSN

08826110

First Page

270

Last Page

279

Issue

2

Volume

26

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