Market Based Accounting Research Impacts

Market-based Accounting Research
Accounting provides financial data about the performance of a company. This data enables accounting information users, including investors, to take their decisions about investing in the shares of a company. Similarly, accounting research evaluates the usefulness of this accounting data to investors and other users. The relationship between the two can be examined through market-based accounting research. Market-based accounting research is a search into relationship between publicly disclosed accounting information and the consequences of use of this information by equity investors. In other words, market-based accounting research examines the association between accounting numbers and security return and tests whether or not accounting data carry any information content to security market.

Don't use plagiarized sources. Get Your Custom Essay on
Market Based Accounting Research Impacts
Just from $13/Page
Order Essay

Get Help With Your Essay
If you need assistance with writing your essay, our professional essay writing service is here to help!
Essay Writing Service

Rationale for the Research
Market-based Accounting Research is extremely relevant to the study of capital market efficiency, CAPM, information economics and regulation. The main drive of market-based accounting research comes from major developments in finance theory during the last few decades, especially in late 50s and early 60s. These developments include portfolio selection theory, Capital Asset Pricing Model (CAPM), and the concept of information-efficient capital markets followed by developments in information economics, agency theory and optimal incentive-signaling models.
The rationale of this study has its basis in the research in this area in the past. Over the past three decades, a significant amount of research in market-based accounting research has emerged to evaluate the usefulness of accounting data to investors and the association between the accounting numbers and security return. In fact in the recent years due to development of capital markets, globalization and increase in stock trading, market-based accounting research has become even more important. Contemporary market-based accounting research has primarily focused on its international dimension which has had important policy implications for regulators and others who deal with disclosure requirements in different stock exchanges.
The focus of this dissertation will be on examining how market-based accounting research impacts the kind of common stock traded in major stock exchanges. In light of this, the study will examine the relationship between accounting numbers, stock market returns and market valuations.
Key Aims & Objectives
As indicated above, the prime focus of the study is to examine contemporary accounting theory and research with an emphasis on market-based accounting research and its impact on capital markets. As market based accounting research is based on the valuation of firms and their securities, the use of financial statements for valuation purposes, and the implications for financial reporting and corporate governance, all these areas will form a part of this study.
The study aims to:

Describe the concept of market based accounting research
Identify the information content of market-based accounting research
Provide an insight into local market conditions as well as comparative international state of market-based accounting research.
Examine the role of market-based accounting research and the importance of disclosure of accounting information on capital markets
Examine how published information is used by investors for designing their trading strategies
Describe how market-based accounting research information impacts the capital markets efficiency
Describe accounting based valuation and relate it to the content of brokers’ reports

Key Research Questions
The three key research questions proposed to be examined by this study are:

What is the role of accounting information in capital markets?
What is the information content of accounting information?
What is the market-based accounting research hypothesis in context of influence on investors investing in stocks?

Another key research question is how the market reacts to reported earnings, as well as the impact of reported earnings on the properties of analysts’ forecasts.
These questions, especially the information content of accounting information, can be measured by the influence of the information on security prices. While measuring the influence it is assumed that investors can understand the differences in earnings that are due to differences between accounting methods. In other words, the study is based on efficient market hypothesis or the assumption that stock prices accurately and quickly adapt to all available information and therefore prevent individuals from getting abnormal return.
Proposed Research Methodology
Sources of Data / Information
The study will be both exploratory as well as descriptive and will rely on both primary as well as secondary sources of information.
Sampling for Primary Information
Primary data will be collected from a sample consisting of both brokers as well as individual and institutional active investors who have invested in equity shares in a few pre-selected companies listed on the US or European stock exchanges. The period of investment will be from 2000-2006 as 6 years is a sufficient time to analyse the impact. These investors will be chosen on the basis of the frequency with which they invest in the securities.
Data will be collected by administering questionnaires seeking information on how these investors make an investment decision.
Sources of Secondary Information
The prime source of secondary data will be:

Annual reports of the selected companies under consideration. The variables that will be focused upon will include stock returns, dividends, net income on sale, return of equity, return on asset, debt ratio, interest coverage, current ratio, Price-earning ratio and price.

The final report will be supplemented with information from:

Literature searches ( refer list of references at the end of the document )
Past articles and research in the area
Internet searches: Searching specific data from Yahoo and Google search engine

Data Analysis
Data will be compiled into data master sheets. The statistical description for all the variables will be presented in a separate table. The various sets of information pooled over the five year period of study will be clearly presented in the table in context of the various variables. The standard deviation and also correlation between the variables and the stock return will be determined and analysed. Correlation will be based on Karl Pearson’s method of correlation.
In addition to standard deviation and correlation, regression analysis will also be used for examining the market reaction to reported accounting information. Regression is used for analysis of impact of independent variables on the dependent variable. The dependent variable for regression analysis will be stock returns while the independent variables will be dividends, Net income on Sale, return of equity, return on asset, debt ratio, interest coverage, current ratio, and price-earnings ratio. Regression equations will be solved using Ordinary Least Square method (OLS).
Qualitative data gathered from the investors may include opinions of respondents on a certain issues, reasons for certain behaviour and descriptions of certain procedures, practices or perceptions with which the researcher is not familiar. The data can be analysed by classifying all answers into a few categories.

Abeyratna, G, A.A.Lonie, D.M. Power and C.D. Sinclair (1993), The Stock Market Reaction to Dividend Announcements: A UK Study of a Complex Market Signal, University of Dundee.
Bonin, Joseph M. and Edward A. Moses (1974), Seasonal Variations in Prices of Individual Dow Jones Industrial Stocks, Journal of Financial and Quantitative Analysis
Charest, Guy (1978) Dividend Information, Stock Returns and Market Efficiency II, Journal of Financial Economics, Vol. 6
Dyckman, Thomas R. and Dale Morse (1986), Efficient Capital Markets and Accounting: A Critical Analysis, Prentice-Hall.
Foster, Taylor W. and Don Vickrey (1978) The Information Content of Stock Dividend Announcement, Accounting Review. Vol. LIII. No. 2
Kinney, W. (April 1986.), Empirical Accounting Research Design for Ph.D. Students, Accounting Review
Kothari, S.P. Capital Markets Research in Accounting, Journal of Accounting and Economics Vol. 31 Nos. 1-3
Ross, Stephen A. 1978, The Current Status of the Capital Asset Pricing Model (CAPM). The Journal of Finance, Vol.XXXIII. No. 3
Scholes, Myron S. 1972. The Market for Securities: Substitution versus Price Pressure and the Effects of Information on Share Prices, Journal of Business


What Will You Get?

We provide professional writing services to help you score straight A’s by submitting custom written assignments that mirror your guidelines.

Premium Quality

Get result-oriented writing and never worry about grades anymore. We follow the highest quality standards to make sure that you get perfect assignments.

Experienced Writers

Our writers have experience in dealing with papers of every educational level. You can surely rely on the expertise of our qualified professionals.

On-Time Delivery

Your deadline is our threshold for success and we take it very seriously. We make sure you receive your papers before your predefined time.

24/7 Customer Support

Someone from our customer support team is always here to respond to your questions. So, hit us up if you have got any ambiguity or concern.

Complete Confidentiality

Sit back and relax while we help you out with writing your papers. We have an ultimate policy for keeping your personal and order-related details a secret.

Authentic Sources

We assure you that your document will be thoroughly checked for plagiarism and grammatical errors as we use highly authentic and licit sources.

Moneyback Guarantee

Still reluctant about placing an order? Our 100% Moneyback Guarantee backs you up on rare occasions where you aren’t satisfied with the writing.

Order Tracking

You don’t have to wait for an update for hours; you can track the progress of your order any time you want. We share the status after each step.


Areas of Expertise

Although you can leverage our expertise for any writing task, we have a knack for creating flawless papers for the following document types.

Areas of Expertise

Although you can leverage our expertise for any writing task, we have a knack for creating flawless papers for the following document types.


Trusted Partner of 9650+ Students for Writing

From brainstorming your paper's outline to perfecting its grammar, we perform every step carefully to make your paper worthy of A grade.

Preferred Writer

Hire your preferred writer anytime. Simply specify if you want your preferred expert to write your paper and we’ll make that happen.

Grammar Check Report

Get an elaborate and authentic grammar check report with your work to have the grammar goodness sealed in your document.

One Page Summary

You can purchase this feature if you want our writers to sum up your paper in the form of a concise and well-articulated summary.

Plagiarism Report

You don’t have to worry about plagiarism anymore. Get a plagiarism report to certify the uniqueness of your work.

Free Features $66FREE

  • Most Qualified Writer $10FREE
  • Plagiarism Scan Report $10FREE
  • Unlimited Revisions $08FREE
  • Paper Formatting $05FREE
  • Cover Page $05FREE
  • Referencing & Bibliography $10FREE
  • Dedicated User Area $08FREE
  • 24/7 Order Tracking $05FREE
  • Periodic Email Alerts $05FREE

Our Services

Join us for the best experience while seeking writing assistance in your college life. A good grade is all you need to boost up your academic excellence and we are all about it.

  • On-time Delivery
  • 24/7 Order Tracking
  • Access to Authentic Sources
Academic Writing

We create perfect papers according to the guidelines.

Professional Editing

We seamlessly edit out errors from your papers.

Thorough Proofreading

We thoroughly read your final draft to identify errors.


Delegate Your Challenging Writing Tasks to Experienced Professionals

Work with ultimate peace of mind because we ensure that your academic work is our responsibility and your grades are a top concern for us!

Check Out Our Sample Work

Dedication. Quality. Commitment. Punctuality

All samples
Essay (any type)
Essay (any type)
The Value of a Nursing Degree
Undergrad. (yrs 3-4)
View this sample

It May Not Be Much, but It’s Honest Work!

Here is what we have achieved so far. These numbers are evidence that we go the extra mile to make your college journey successful.


Happy Clients


Words Written This Week


Ongoing Orders


Customer Satisfaction Rate

Process as Fine as Brewed Coffee

We have the most intuitive and minimalistic process so that you can easily place an order. Just follow a few steps to unlock success.

See How We Helped 9000+ Students Achieve Success


We Analyze Your Problem and Offer Customized Writing

We understand your guidelines first before delivering any writing service. You can discuss your writing needs and we will have them evaluated by our dedicated team.

  • Clear elicitation of your requirements.
  • Customized writing as per your needs.

We Mirror Your Guidelines to Deliver Quality Services

We write your papers in a standardized way. We complete your work in such a way that it turns out to be a perfect description of your guidelines.

  • Proactive analysis of your writing.
  • Active communication to understand requirements.

We Handle Your Writing Tasks to Ensure Excellent Grades

We promise you excellent grades and academic excellence that you always longed for. Our writers stay in touch with you via email.

  • Thorough research and analysis for every order.
  • Deliverance of reliable writing service to improve your grades.
Place an Order Start Chat Now

Order your essay today and save 30% with the discount code Happy