Relationship between Accounting Information and Investment Returns

by



Abstract

The aim of the study is to find the relationship between the stock return and the accounting information provided by the company. For the pupose of this research, we have selected six companies from the western and Asian market. In this paper, the companies are evaluated on different benchmarks. A company that is achieving all the points is classified as best stock which also means that the information provided by the company throught financial statements are accurate and reflects the prices accurately.

Table of Contents

CHAPTER 1 INTRODUCTION4

Aims and Objectives5

Research questions6

CHAPTER 2 LITERATURE REVIEW8

Theoretical Framework9

Objectives Of Investment In Securities12

Accounting conservatism, ultimate ownership and investment efficiency13

Portfolio Theory18

Firm Foundation Theory and Fundamental Analysis19

Dow Theory and Technical Analysis23

The Random Walk and the Efficient Market Hypothesis25

CHAPTER 3 RESEARCH METHODOLOGY30

CHAPTER 4 RESULTS AND DISCUSSION33

WESTERN MARKET ANALYSIS34

1)Jazz pharmaceuticals34

2)Premier Foods37

3)Tate & Lyle plc42

ASIAN MARKET ANALYSIS47

1)Korean Electric Power47

Profitability Ratios48

Liquidity Ratios49

Assets Management Ratios49

Debt Management50

Per Share or Investor Ratios50

Dividend Flow per Share50

2)Wall Mart50

3)Tata Motors54

CHAPTER 5 CONCLUSION62

CHAPTER 1 INTRODUCTION

The competition plays an important role in the global economy, as this has forced the companies to implement an accounting system that contributes to harmonious growth of both the company and the market, and thus achieve a higher standard to meet the needs of environment that demands quality and trust. People outside the company began to experience in accounting, an essential tool to help them make their own decisions, for that reason have been increased user information in an economic entity, formerly known as single-user was the owner and now appear multiple users such as the state , investors, customers , entities controlling , employees, general public, among others.

Taking into account the different users have raised interesting discussions in the presentation of information, since there are two variables: providing specific or general, put another way to present information relevant to each user only or deliver reports covering the interests of all users. An information system is a set of interrelated elements that collects data, processes it and becomes information, which stores and later disclosed to users.

Accounting is an information system, as it captures, processes, stores and distributes vital information for sound decision-making in the company. The key role played by accounting to control and organize the various activities of the company in order to meet the situation where this is located, in a flexible, timely and useful to carry out the purposes you want to perform and thus meet the objectives. The SIC must not only be a system to provide information, to enable the direction of the company have a mere technical control over it, but should allow decisions making. An accounting information system includes the methods, procedures and resources used by an entity to take controlling financial activities and summarize them in a form useful for decision-making. Accounting information can be classified into two broad categories:

The accounting or financial accounting outsourcing.

Accounting costs or internal accounts.

Financial accounting: displays the information provided to the general public, and not involved in the management of the company, such as ...