Accrual Quality and Stock Price Informativeness: Evidence from India.

Gregory D Lyimo


This study examines the relationship between accrual quality and stock price informativeness. Study used secondary data collected from prowess database similar to prior studies Ansari &Khan 2012 and Dhole, et al. 2012. The study used sample of 91 companies listed in BSE 100 during the period of 2007 to 2011. We employed Breusch-Pegan Lagrange multiplier (LM) to select panel regression model and also eliminate the effect of outliers by deciles rank of accrual quality similar with prior study (Johnston 2009 and Jing 2007). We employed random effect panel regression model to investigate relationship between accrual quality and stock price informativeness. The results suggest that accrual quality is positively related to stock price informativeness. The present findings are similar with Jing (2007) and Johnston 2009 who find positive significantly association between accrual quality and stock price informativeness in USA. Results support that accrual quality matters in the process of incorporating firm specific information.


Keywords: Stock price informativeness, Stock price synchronicity, Earnings quality, and Accrual quality: synchronicity and informative will be interchangeable to mean inverse of each other.

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