Value Relevance of Accounting Information in the Botswana Listed Companies

Christian J. Mbekomize and Selinkie Popo

International Business Research, 2020, vol. 13, issue 5, 46

Abstract: The main purpose of the study was to examine the statistical relationship between four sets of accounting information and market share prices using the data of companies listed on the Botswana Stock Exchange over the period from 2012 to 2018. Annual reports and Botswana Stock Exchange – Equity Statistics data bank were the sources of accounting information and market prices respectively. The Ordinary Least Square regression method was used to analyse data. The results suggest that earnings are the most value relevant information to share prices followed by dividends and lastly book value. While book value yielded weak value relevance operating cash flows did not explain changes in share prices in the Botswana equity market. The combination of earnings and dividends was more value relevant than any other mix of accounting amounts. The study further revealed that the market share price at the end of the 6th month from the year end was the most influenced price. These results have implications to quoted companies regarding the importance they attach on earnings and dividends information and their timely publication. The paper recommends for speedy dissemination of earnings and dividends information since investors significantly consider such information in market share pricing decisions.

Date: 2020
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