Corporate governance and the value‐relevance of accounting information

Ahsan Habib and Istiaq Azim

Accounting Research Journal, 2008, vol. 21, issue 2, 167-194

Abstract: Purpose - This paper seeks to examine the relationship between corporate governance and the value‐relevance of accounting information in Australia. Design/methodology/approach - This paper uses board, audit committee and external audit related variables to proxy for corporate governance. Value‐relevance is measured by the adjustedR2derived from a regression of stock price on earnings and equity book values following Ohlosn's accounting‐based valuation framework. Findings - Regression results show that firms with strong governance structure exhibit higher value‐relevance of accounting information. Results further show that firm‐specific economic variables are important determinants of the value‐relevance of accounting information. Research limitations/implications - Significant regulatory reforms regarding corporate governance around the world give an impression that regulators believe that governance plays a key role in ensuring, among others, credible financial reporting. This paper provides support for such a view in Australian context. Originality/value - This paper uses the relationship between accounting numbers and share price as the measure of accounting information quality and also considers the impact of ASX Corporate Governance Best Practice Code on the changes in the value‐relevance of accounting information.

Keywords: Corporate governance; Accounting; Accounting information; Australia (search for similar items in EconPapers)
Date: 2008
References: Add references at CitEc
Citations: View citations in EconPapers (12)

Downloads: (external link)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (text/html)
https://www.emerald.com/insight/content/doi/10.110 ... d&utm_campaign=repec (application/pdf)
Access to full text is restricted to subscribers

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:v:21:y:2008:i:2:p:167-194

DOI: 10.1108/10309610810905944

Access Statistics for this article

Accounting Research Journal is currently edited by Professor Reza Monem

More articles in Accounting Research Journal from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().