Abstract:
Main objective of the accounting information is providing useful information to
stakeholders of the entity. Current and prospective investors are the most important
users of such information. Public Listed Companies in the stock market use financial
statement as one of the main medium of communication with their stakeholders.
Value relevance can be defined as the ability of information disclosed by financial
statement to capture and summarize firm value. Investors predict future performance
through existing accounting information. When the economy changes time to time
investors need to be referred timely information for the investment decision making.
If the investors depend on outdated information, investment decision will become
inappropriate and ineffective. On the other hand, investors can obtain the short-term
financial progress from the interim quarterly financial statements and also they can
use audited annual financial reports after completing the accounting year.
Therefore, the purpose of this study is to distinguish the value relevance between
interim financial statements and the audited annual financial statements in Sri Lanka
context. The study is based on 35 listed manufacturing companies in the Colombo
Stock Exchange (CSE) for the period of 2012 to 2017. The relevant data were
gathered from the published interim financial report, audited annual financial
statement and publish research articles. Earnings per share, book value per share,
dividend per share and return on equity are use as key independent variables. Data
were analyzed using correlation and regression analysis through E-views software.
The results show that the interim financial statement appear to have higher value
relevance than annual financial statement and value relevance of accounting 4th International Conference for Accounting Researchers and Educators
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information has the significant impact on share price and value relevance of
accounting information is significantly correlated with the share price
