The Impact of Value Relevance of Accounting Information on Share Price A Study of Pre and Post Ind as Scenario of Selected Information Technology Companies in India

Abstract

The Ind AS implementation has led to substantial improvements in financial reporting, making accounting information more reliable and relevant worldwide. Even minor changes to financial reporting can significantly impact the decision-making processes of shareholders who highly depend on accounting information to make informed investment choices. So, this motivates the researcher to investigate the impact and compare the impact of value relevance of accounting information on share price in pre- and post- Ind AS period for selected IT companies in India. The sample consisted of eight IT companies for secondary data and 100 shareholders perceptions for primary data. The secondary data has been analysed using OLS Regression Method, FEM, and REM. The time frame of the study has been divided equally into four financial years for pre- Ind AS period from 2012-13 to 2015-16 and four financial years for post-Ind AS period from 2016-17 to 2019-20. The primary data has been analysed using percentages, weighted averages, and chi-square test. The overall results indicate that BVPS, EPS, P/E Ratio, and ROE are the most significant accounting information to determine MPS. When it comes to making investment decisions, ROE is considered commonly used accounting information followed by P/E Ratio, BVPS, and EPS based on beta coefficients. The study found that BVPS, EPS, P/E Ratio, and ROE have significant impact on MPS. But ATR, CF, DPS, and ROA have not been statistically significant with MPS. In other words, BVPS, EPS, P/E Ratio, and ROE are value relevant while ATR, CF, DPS, and ROA are not value relevant. The comparison of variables of pre- and post- Ind AS period indicates that MPS, ATR, BVPS, CF, DPS, EPS, P/E Ratio, and ROA have no significant difference between before and after Ind AS implementation but ROE has significant difference between before and after Ind AS implementation of selected IT companies. Findings concluded that the overall value relevance of accounting information is equally value relevant in both pre- and post- Ind AS period. The analysis of the perception of shareholders indicates that shareholders prefer value relevance of accounting information and aware of Ind AS. According to shareholders, EPS has the highest influence on investment decisions and ROA has the lowest influence on investment decisions. newline