VALUE RELEVANCE AND STOCK PRICES PREDICTON: A NEW INSIGHT FOR FUTURE RESEARCH

Abstract

Discussions on the importance and contribution of accounting information's relevance in predicting stock prices have always been a hot topic among accounting researchers. This topic is always interesting to discuss because stock prices theoretically reflect the financial information available from companies, contained in the company's accounting reports. Accounting information has the informative ability to describe and predict a company's stock price if presented in accordance with the accounting standards that serve as guidelines for its preparation. Compliance with accounting standards is a crucial point in determining the quality of accounting information's relevance in predicting a company's stock price. Few studies have also investigated the role of corporate governance mechanisms in determining compliance with accounting standards for the preparation of quality accounting reports and their relationship to value relevance and stock price prediction. This study attempts to outline a discussion of various existing research methods to explain the relationship between accounting information's relevance in predicting stock prices and contributes new ideas regarding the comprehensive relationship between corporate governance mechanisms and increasing the relevance of accounting information in predicting stock prices.