The Relationship between Financial Statements Comparability with Stock Price in Formativeness about Future Earnings

Abstract

AbstractThe present research deals with explaining the relationship betweenfinancial statements comparability and the stock price informativeness regarding the future earnings as well as explaining therole of the financial statements comparability in reflecting the firm’sspecific future earnings data and reflecting the future earnings datarelevant to the industry in the stock price of the current period. Thetime period of this research for the 4-year has been considered fromthe beginning of 1386 till the end of 1389. However, data from 1383to 1386 and 1390 to 1392 is also used to calculate some variables. Theresearch sample consists of 85 listed firms in Tehran Stock Exchange.The multivariate regressions have been used for the statisticalanalysis. Four control variables-size, growth, loss and earningsvolatility-have been used. According to the accomplished tests there isno positive relation between the financial statements comparabilityand the stock price in formativeness. The financial statementscomparability does not contribute in reflecting the future earnings datarelevant to the industry and reflecting the firm’s specific futureearnings data in the stock price of the current period

Keywords

• comparability
• price in formativeness
• future earnings response coefficient
• firm’s specific earning