ANALYSIS OF THE RELATIONSHIP BETWEEN PUBLISHED ACCOUNTING INFORMATION AND STOCK TRANSACTION PRICES; A COMPARISON BETWEEN U.S.A. AND A.R.E.

Abstract

Efficient capital market studies investigated accounting irforation content and its relationship with stcck prices in developed countries, such as the Unitec States, Australia, and he United Kingdom. Previous studies in this area provided empirical evidence that thoro is a relationship between accounting iriormat_on and stock prices. The current study empirically investigated the relationship between stock prices and pub'l.shed accanting incrmaticn in a developing country (Egypt) comparatively wit developed one

(United States). The nan objective of this investigation is to se the Egyptiar capital market as an experimental control laboratoryi.

Tne current study answered the following questions:

1. Does Egyptian capital market present an appropriate experimental environment for testing hypotheses of the underlying theories or models of market based accounting research? .

2. Does the stock prices in zhe Egyptian capital market reflect all available accounting information?

3. If stock prices ir Egyptian capital market does not fully reflect all published accounting information, what are our suggestions to improve "he accounting intormation role? .

To answer the above questions, rate of change n stock prices

(a3E' used as ceperdent variable. The independent variables

were; change 1n a ratc of return on owners' equity (ROE), rate