Information content of accounting and Capital Market Development

Document Type : Original Article

Authors

1 Department of Accounting, Kashan Branch, Islamic Azad University, Kashan, Iran

2 Professor of IAU, Department of accounting, Science and Research Branch, Islamic Azad University, Tehran, Iran

3 Associate Professor, Department of Accounting, Kashan Branch, Islamic Azad University, Kashan, Iran

4 Assistant professor of Tarbiat Modares University(TMU)

Abstract

An efficient capital market requires companies to provide quality financial information. It is also expected that with the development of the capital market, market participants pay more attention to the Information content of accounting. Therefore, the present study seeks to answer the question to what extent the Information content of accounting and capital market development are affected by each other? 207 companies were selected in the period of 2013-2019 using fixed and random effects method as well as generalized torque estimator (GMM) and with the help of Stata software, the research hypotheses have been tested. To measure market development, three variables of stock market size, activity volume and turnover ratio were used and to calculate the Information content of accounting the model of Kevin et al. [29] has been used. The results of examining the hypotheses showed that both the variables of capital market development and the Information content of accounting have a positive effect on each other. Also, the development of the market in the past one and two periods has had a significant and positive effect on the development of the capital market in the current period, while the Information content of accounting of the past one and two periods do not have a significant impact on the content of current accounting information.

Keywords

References

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International Journal of Finance & Managerial Accounting
Volume 6, Issue 23 - Serial Number 23
October 2021
Pages 229-242

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