Accounting - Theses

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The value relevance of earnings and earnings components: the case of Saudi Arabia

Alsehali, Mohammed Sultan ( 2002)

The extant literature on the value relevance of accounting information focuses on common-law or code-law countries. There is no credible evidence on the value relevance of accounting information in Islamic-code countries. This thesis provides the first empirical evidence on this issue in Saudi, which is recognised as the centre of the Islamic faith. The focus of the thesis is on the examination of the Saudi market reaction to the release of accounting reports and the association between reported earnings and earnings components with security returns of Saudi firms. Using a sample from the 1995-1999 period, the empirical evidence suggests that inconsistencies between Islamic principles and adopted accounting principles in Saudi do not affect the value relevance of accounting information in Saudi. Most of the empirical tests provide evidence consistent with and highly comparable to those reported in common -law and code-law countries, in general, and those in the United States, in particular.