Review of Studies on the Effect of Accounting Indicators on Share Price Movements

Abstract

Financial decisions heavily rely on accounting information. This paper aims to review the different sources concerning accounting information and share price movements. The earlier studies have considered mostly return indicators. Researchers developed a novel approach to considering both return and risk indicators. In indicating the accounting indicators, researchers used different variables like book value, earning per share (EPS), dividend, dividend pay-out ratio (DPR), price-earnings ratio (PE ratio), and return on asset and return on equity ratio. In comparison to other indicators, book value per share (BVPS) and earnings per share (EPS) are the most significant and effective of these variables. The results of studies on the accounting information’s influences on share prices fluctuate from country to country, which may be due to discrepancies in accounting regulations, the implementation of numerous techniques, and macroeconomic indicators.