Journal of Business & Economic Policy

IFRS and Accounting Information Relevance: The Case of Saudi Arabia
Dr. Salah Ahmed ORABY

Abstract
This study aims to determine whether accounting information under IFRS is value relevance or not and which accounting information is more value relevance in Saudi Arabia. To achieve this aim the researcher conducted a quantitative study on a sample of 11 banks listed in Saudi Stock Exchange during the period from 2006 to 2015. Using panel date three regression models are performed to test research hypotheses. Model 1 includes both earning per share and book value per share as independent variables and price per share as a dependent variable. Results indicated that adjusted R-squared explains about 0.2660 of changes in share prices and earnings per share are significant but book value per share is not significant. When considering earning per share alone as independent variable in regression model 2.It is found that earnings per share is significant and explains about 0.272 of share price. By comparing results of model 1 with results of model 2. It is found that earning per share alone is more value relevance than both earnings per share and book value per share In Saudi banking industry. In addition, when considering book value per share alone as independent variable in regression model 3.It is found that book value per share is significant and explains only about 0.061 of share price. By comparing results of model 1 with results of model 3. It is found that both earning per share and book value per share are more value relevance than book value per share alone In Saudi banking industry. Correlation analysis supports these results. It can be said that earnings per share rather than book value per share is of high quality in value relevance studies under IFRS in Saudi banking industry.

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