The Relationship Between Market Value Per Share, Earnings Per Share and Book Value Per Share in IFRS Implementation Process (Evidence from the BIST 50)Alper Oflas, Mohammad Reza Toutounchi Asl
Since the beginning of 21st Century, financial reporting has served as the most authoritative criteria of International Financial Reporting Standards (IFRS). The implementation process requires improvement in the quality and comparability of financial reporting and impacts stock value and investors’ decisions. The aim of this study is to determine the statistical power of changes in stock market prices due to the adoption and implementation of IFRS. In this study, book value and earnings per share are defined as independent variables and market value per share is the dependent variable. The statistical subjects of the study included all nonfinancial companies that have been traded in Borsa Istanbul. As the sample set, the research presents a 19-year (2000–2018) review of 24 companies in BIST 50, that are active during the study. Accordingly, data are collected annually (cross-sectional data) and a Least Squares Regression method is applied for analysis. The results reveal that the approval, publication, and implementation of accounting and financial reporting standards increase the relationship between the variables of study and regression increases directly from (0.4713) to (0.8740) from 2005 to 2018.
UFRS Uygulanma Sürecinde Hisse Senedi Piyasa Değeri İle Hisse Başına Kazanç ve Hisse Senedi Defter Değeri Arasındaki İlişki (BİST 50’ye Dayalı Bir Uygulama)Alper Oflas, Mohammad Reza Toutounchi Asl
21. Yüzyılın başından beri finansal raporlamanın en önemli kriteri Uluslararası Finansal Raporlama Standartlarıdır (UFRS). Bu sürecin uygulanması; finansal raporlamanın kalitesini ve karşılaştırılabilirliğini arttırarak, hisse senetlerin değerlerini ve ardından yatırımcıların kararlarını etkilemektedir. Bu araştırmanın amacı UFRS’lerin kabul ve uygulanma etkisinin hisse senedinin piyasa fiyatında yarattığı değişikliklerin istatistiksel gücünü açıklamaktır. Bu araştırmada hisse senedinin defter değeri ve hisse başına kazanç bağımsız değişken ve hisse senedi fiyatı bağımlı değişken olarak tanımlanmaktadır. Ayrıca istatistik ana kütlesi Borsa İstanbul’da (BİST) işlem gören ve mali olmayan şirketleri kapsamaktadır. Araştırmanın analiz dönemi 19 yıllık (2000- 2018) bir inceleme ve aktif olan BİST 50’deki şirketler örneklem kümesi olarak listelenmektedir. Bu doğrultuda, araştırma verileri yıllık olarak (Kesit Veri) toplanıp analize hazırlanmakta ve tümü için en küçük kareler regresyon yöntemi kullanılmaktadır. Araştırmanın analiz döneminde sonuçlar, muhasebe standartlarının ve finansal raporlama standartlarının onaylanıp yayınlanması ve uygulamaya geçmesi araştırmanın değişkenleri arasındaki ilişkinin artmasını ve regresyonun 2005’ten 2018’e kadar (0.4713) rakamından (0.8740) rakamına doğrudan artmasını göstermektedir.
Regarding stock valuation, the most accepted approach in theory is the “Dividend’” approach. Additionally, price/earnings ratio and market value/book value ratio approaches are also used. Book value per share and earnings per share are widely used in stock valuation (Aktaş, 2008). Consequently, when endeavoring to make financial decisions, the information produced in enterprises’ accounting information systems must be high quality. With “Qualitative Features of Financial Statements” within the conceptual framework of financial reporting provided by the International Accounting Standards Board, we obtain quality data from the accounting information system. International Financial Reporting Standards (IFRS) make it possible to produce comparable financial statements worldwide. Turkey also adopted these amended and updated international reporting standards. This study examines the effect of the acceptance, publication, and enforcement of IFRS in Turkey on the relationship between market value per share, earnings per share, and stock book value, and whether its intended affects are also applicable in Turkey, based on the results of this analysis.
According to Kaya and Utku’s (2019) study on developments in the process of adopting IFRS in Turkey, until 2005 oversight was provided by a Board that was founded in 1994. The aim of this study is to examine the effects of changes to the public reporting of companies’ financial performance in transitioning to IFRS in 2005 at 12 different financial rates. The result demonstrates significant differences in long-term financial ratios in Turkey, particularly when the IFRS transition was observed. Çürük and Tanyeri (2018) investigated the impact of the transition to consolidation based on companies traded on the stock market in Turkey. In order to investigate whether the tables issued according to IFRS 10 had any effect on the companies’ return, the relationship between the stock return and financial rates was tested using a regression analysis. According to the results, the transition to consolidation is critical, and significant changes have occurred at the level of companies’ explanation of return on financial rates following consolidation.
Sultanoğlu (2014) carried out an empirical study on the suitability of financial information presented in the financial statements prepared by businesses traded in Borsa Istanbul in Turkey since 2005 using a panel regression analysis. According to the results, a significant increase in the suitability of financial information to the needs following the implementation of IFRS was demonstrated. Moreover, Return Model analysis results found that an upward change in the net profit value was reflected in the stock return after the transition to IFRS. Şen and Terzi (2013) examined the work of local accounting regulations, International Accounting Standards, and IFRS to investigate the impact of the transition on equity. The analysis determined that the transition to IAS/IFRS had statistically significant effects on the equity items.
Research information is provided via the second source scanning method. To test the research hypothesis, a multivariate regression model is applied using section data. Data were obtained by referring to the financial statements of companies that were accepted and traded in Borsa Istanbul. The financial statements of the selected companies from 2000 to 2018 are analyzed covering 19 years. Analyses of the resulting financial statements are calculated using Microsoft Excel 2016 software. The main subjects of the study are the BIST 50, which was accepted and traded on Borsa Istanbul. Of these 50 companies, 26 were excluded from the analysis for various reasons, leaving a final number of 24 companies included in the research over a 19-year period (456 company-years).
The dependent variable of this study is market value per share and the independent variables are earnings per share and book value per share. Accordingly, a regression model is provided to test the research hypothesis. In this model, the multivariate regression (Multiple R) measures the relationship between variables, the coefficient (R2 ) and the adjusted coefficient determination (Adj. R2 ) measure the power of the independent variables in explaining the dependent variable. The approval and publication of accounting standards and financial reporting standards within the timeframe of the study were examined and their application was revealed to be correlated with an increase in the relationship between the variables of the research. According to the multivariate regression graph of statistical data resulting from the analysis, there were three peaks: in 2007 (0.5912), 2012 (0.8414), and 2018 (0.8740). The main sources for these three peaks are TFRS 7 with TFRS 7 for 2007; TFRS 10 for 2012; and TFRS 12, TMS 27, TMS 28, TFRS 9, TFRS 15, and TFRS 16 come into force in 2018. Coefficient and adjusted coefficient of determination increased directly from 2005 to 2018 (0.4713–0.8740). This result can be attributed to the establishment of Turkey’s Public Oversight Accounting and Auditing Standards Authority, which provided a valuable focus for investors resulting from the availability of high-quality reports. IFRS are approved, published, and implemented step-by-step; in other words, standards’ implementation of the companies in countries trading on the stock exchange results in improving the quality of financial statements. For this reason, the research results support other studies that have been done before (Wulandari and Rahman, 2004; Callao, 2007; Clarksonve ark., 2011; Çürük and Tanyeri, 2018; Key and Kim, 2020; Kandimov, 2020).