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Published Accounting Information and Stock Prices

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Discuss how publishing accounting information affects prices on the stock exchange.

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Solution Summary

How published accounting information can affect stock prices is discussed in a structured manner in this response. The related references are also provided.

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The Title:
Published accounting information can directly affect the price of stocks listed on a specific stock exchange.

The Research Purpose:
Even though accounting information such as earnings and book value directly affect the price of stocks there is a notion that published accounting information does not directly affect the price of stocks in a specific stock exchange. The purpose of this research is to find out if published accounting information does directly affect the price of a stock on a specific stock exchange. The study will clarify pre-conceived notions, understand the met and unmet needs of investors, and hear investor/ stock exchange broker voices in their own words. The study will uncover ideas/ issues that may not have been considered in the context of accounting information and stock prices. The study will discover the decision-making process that influences stock prices in exchange (1).

Background
Published accounting information is used by investors to assess the value and make credit analyses of companies. Also published accounting information such as the balance sheet, income statement, and cash flow statements are used by stock investors to comprehend the firm's financing sources, determine an assets' value, estimate the risks involved, and compute profitability. This information affects the stock prices of a company. Moreover, published accounting information help investors calculate the profit margin, and operating margin, and understand the management effectiveness of a company. The ...

Solution provided by:
Hatim Baxamusa, MBA
Education
  • BSc , University of Calcutta
  • MBA, Eastern Institute for Integrated Learning in Management
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