Value relevance of accounting and analysts’ forecasts: does the emerging country’s information environment matter?
DOI:
https://doi.org/10.5007/2175-8069.2021.e79630Abstract
This study analyzes the value relevance of accounting information and the quality of analysts’ forecasts in different information environments of emerging countries. We analyze 7,024 non-financial companies in 21 countries in the period from 2000 to 2016. The qualities of the analysts’ forecasts (AFQ) and the information environment (CIEI) of the countries are captured using indexes built by Principal Component Analysis. The value relevance of the AFQ is analyzed using the model proposed by Collins, Maydew, and Weiss (1997). Our results suggest that AFQ is value relevant in emerging markets, helping to explain the firms’ stock price. Still, the evidence points out that the AFQ adds relevance to the accounting information, with emphasis on the information about shareholders’ equity. We found that accounting and AFQ are value relevant, regardless of whether CIEI is high or low. More than that, we differentiate ourselves from previous studies by grouping in an original way some quality indicators of the analysts’ forecasts, and the information environment, noting that both accounting information and AFQ become more relevant when the country’s information environment is better.
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