Relevance of Income Components and Firms Value – Empirical Study on Listed Industrial Companies (2003-2012)

Abstract

This paper investigates into the implications of financial information included in financial statements in relation to value relevance and to explain reasons behind fluctuation in stock market value. Based on a sample of 50 industrial listed companies in Amman Stock Exchange – ASE, and by running regression statistical analysis, the study concluded that independent variables (EPS, BV, GP) collectively have a significant positive impact on SMP ( R² = 63.6%), moreover OCF as independent variable also has a positive impact on SMP ( R² = 21.9% ; Sig = 0.000), which means that income components affect positively and enhance the firms` value positively. This indicates the importance of accounting information as a denotation for investment decision in stocks.