Document Type : Research Paper

Authors

• zahra heidary sureshjani ¹
• darioush foroughi ²
• Alireza Rohravi Dastjardi ³

¹ Doctoral student of Accounting Department, Faculty of Administrative Sciences and Economics, Isfahan University, Isfahan, Iran

² Faculty Member, Department of Accounting, University of Isfahan

³ Assistant Prof. Department of Accounting, Faculty of Economics and Administrative Sciences, University of Isfahan, Esfahan. Iran

Abstract

Investors' beliefs and expectations form the foundation for their decision-making and behavior. Assets are crucial for companies' current and future decisions, significantly influencing investors' perceptions. Accounting for assets reduces uncertainty about a stock's intrinsic value and shapes expectations regarding the company. Additionally, accounting assets informativeness is a key factor in distinguishing earnings. Hence, the earnings quality may not affect the relationship between assets informativeness and investors' beliefs. This study investigates the relationship between accounting assets informativeness and investors' beliefs, with a focus on the impact of accounting earnings quality. A sample of 249 companies listed on the Tehran Stock Exchange between 2013 and 2023 was selected for analysis. The research model was estimated using panel data, controlling for year and industry effects, through the ordinary least squares method with robust standard errors (clustering errors at the company level). To measure assets informativeness, a ten-year rolling regression of a company's net operating assets against its earnings was employed. The results indicate that increased assets informativeness positively influences investors' beliefs both at the aggregate and discretionary levels. However, assets informativeness related to inherent factors does not impact investors' beliefs. Furthermore, low earnings quality does not weaken the relationship between assets informativeness at the aggregate level and discretionary factors with investors' beliefs. These findings can assist financial statement users, particularly investors and shareholders, in considering the awareness of accounting assets when estimating a share's intrinsic value for investment decisions.

Keywords

• Accounting Asset Informativeness, Investors'
• Beliefs, Earnings Quality, Intrinsic and Optional Company Factors

Main Subjects

• stock exchange