The Impact of of Accounting Information on Stock Returns – Integrative Literature Review


  • Mutaz A. Alshaikh University of Jeddah- Saudi Arabia



Accounting Information, Stock Returns, Empirical Framework


The literature review provides an integrative (and occasionally critical) review and evaluation of relevant literature. This is mostly done by putting this study in the context of relevant research in capital markets accounting and asset pricing, such as arbitrage pricing and the empirical evidence on return anomalies. This research is related to a few key areas of the existing literature, including accounting for capital markets research, empirical asset pricing research, and the significance of idiosyncratic accounting information. The empirical methodology used in this study, which falls under the purview of arbitrage pricing theory, offers a specification for empirical asset pricing accounting where average equity returns are justified in terms of the accuracy of accounting data. This literature creates a case for investigating the plausible impact of the quality of accounting information on expected equity returns and asset prices. The study meets its objectives by estimating a multifactor  asset pricing model where a variable measurement representing the construct of accounting information is on the explanatory side of the model. Toward this end, this study is designed to document empirical evidence with respect to the impact of the quality of accounting information on stock returns.


Download data is not yet available.


Al-Ali, W., Ameen, A., Issac, O., Habtoor, N., Nusari, M., & Alrajawi, I. (2018). Investigate the influence of underlying happiness factors on the job performance on the oil and gas industry in UAE. International Journal of Management and Human Science (IJMHS), 2(4), 1-12.

Algwizi, O. B. O., & Habtoor, N. (2020). The Effect of Management Information Systems on Human Resources Management Practices. International Journal of Management and Human Science (IJMHS), 4(2), 11-25.

Al-Hammali, M. A., Habtoor, N., & Heng, W. H. (2021). Effect of Forced Downsizing Strategies on Employees’ Job Satisfaction. International Journal of Management and Human Science (IJMHS), 5(4), 1-10.

Al-shaibah, M., & Habtoor, N. (2015b). Reward system and job satisfaction: A conceptual review. Global Advanced Research Journal of Management and Business Studies, 4(4), 137-141.

Amir, E., Harris, T. S., & Venuti, E. K. (1993). A comparison of the value-relevance of US versus non-US GAAP accounting measures using form 20-F reconciliations. Journal of Accounting Research, 31, 230-264.

Ball, R., & Brown, P. (1968). An empirical evaluation of accounting income numbers. Journal of Accounting Research, 159-178.

Banz, R. W. (1981). The relationship between return and market value of common stocks. Journal of Financial Economics, 9(1), 3-18.

Barillas, F., & Shanken, J. (2018). Comparing asset pricing models. The Journal of Finance, 73(2), 715-754.

Beaver, W. H. (1968). The information content of annual earnings announcements. Journal of Accounting Research, 67-92.

Black, F. (1972). Capital market equilibrium with restricted borrowing. The Journal of Business, 45(3), 444-455.

Borup, D. (2019). Asset pricing model uncertainty. Journal of Empirical Finance, 54, 166-189.

Bradshaw, M. T., Richardson, S. A., & Sloan, R. G. (2001). Do analysts and auditors use information in accruals?. Journal of Accounting Research, 39(1), 45-74.

Brandimarte, P. (2017). An Introduction to Financial Markets: A Quantitative Approach. John Wiley & Sons.

Caskey, J., Hughes, J., & Liu, J. (2012). Leverage, excess leverage, and future returns. Review of Accounting Studies, 17(2), 443-471.

Chan, L. K., Karceski, J., & Lakonishok, J. (2003). The level and persistence of growth rates. The Journal of Finance, 58(2), 643-684.

Cochrane, J. H. (2005). Financial markets and the real economy. Foundations and Trends® in Finance, 1(1), 1101.

Cohen, W. M., Nelson, R. R., & Walsh, J. P. (2002). Links and impacts: the influence of public research on industrial R&D. Management Science, 48(1), 1-23.

Cooper, M. J., Gulen, H., & Schill, M. J. (2008). Asset growth and the cross‐section of stock returns. the Journal of Finance, 63(4), 1609-1651.

Core, J. E., Guay, W. R., & Verdi, R. (2008). Is accruals quality a priced risk factor?. Journal of Accounting and Economics, 46(1), 2-22.

Dechow, P. M., & Dichev, I. D. (2002). The quality of accruals and earnings: The role of accrual estimation errors. The Accounting Review, 77(s-1), 35-59.

Dechow, P., Ge, W., & Schrand, C. (2010). Understanding earnings quality: A review of the proxies, their determinants and their consequences. Journal of Accounting and Economics, 50(2-3), 344-401.

Dimson, E., Nagel, S., & Quigley, G. (2003). Capturing the value premium in the United Kingdom. Financial Analysts Journal, 59(6), 35-45.

Fama, E. F. & French, K. R. (2015). A five-factor asset pricing model. Journal of Financial Economics, 116, 122.

Fama, E. F. (1965). The behavior of stock-market prices. The journal of Business, 38(1), 34-105.

Fama, E. F., & French, K. R. (1995). Size and book‐to‐market factors in earnings and returns. The Journal of Finance, 50(1), 131-155.

Francis, J., LaFond, R., Olsson, P., & Schipper, K. (2005). The market pricing of accruals quality. Journal of Accounting and Economics, 39(2), 295-327.

Friedman, M. (1953). The methodology of positive economics.

Habtoor, N., & Alharbi, A. A. (2020). Importance of human factors to organizational performance. International Journal of Management and Human Science (IJMHS), 4(1), 11-22.

Habtoor, N., & Al-Shaibah, M. (2015a). Reward system and job satisfaction: a conceptual review. Global Advanced Research Journal of Management and Business Studies.

Habtoor, N., Bin Zumrah, A. R. B., Disomimba, M. N., & Samad, N. S. A. (2016). Effect of HRM practices on service quality: job satisfaction as a mediator variable. In Socioint16: 3rd International Conference on Social Sciences and Humanities. INT Organization Center Acad Research.

Haugen, R. A., & Baker, N. L. (1996). Commonality in the determinants of expected stock returns. Journal of Financial Economics, 41(3), 401-439.

Haugen, R. A., & Heins, A. J. (1975). Risk and the rate of return on financial assets: Some old wine in new bottles. Journal of Financial and Quantitative Analysis, 10(5), 775-784.

Hogan, W. W., & Warren, J. M. (1974). Toward the development of an equilibrium capital-market model based on semivariance. Journal of Financial and Quantitative Analysis, 9(1), 1-11.

Ingersoll, J. E. (1987). Theory of Financial Decision Making (Vol. 3). Rowman & Littlefield.

Karuna, C. (2019). Capital markets research in accounting: Lessons learnt and future implications. Pacific-Basin Finance Journal, 55, 161-168.

Kothari, S. P. (2001). Capital markets research in accounting. Journal of Accounting and Economics, 31(1-3),105-231.

Leuz, C., & Wysocki, P. D. (2016). The economics of disclosure and financial reporting regulation: Evidence and suggestions for future research. Journal of Accounting Research, 54(2), 525-622.

Lev, B., & Gu, F. (2016). The End of Accounting and the Path Forward for Investors and Managers. John Wiley & Sons.

Levi, S., & Zhang, X. J. (2015). Do temporary increases in information asymmetry affect the cost ofequity?. Management Science, 61(2), 354-371.

Lo, K., & Lys, T. (2000). The Ohlson model: contribution to valuation theory, limitations, and empiricalapplications. Journal of Accounting, Auditing & Finance, 15(3), 337-367.

Markowitz, H. M. (1968). Cowles Foundation Monographs. In Portfolio Selection (pp. 353-353). Yale University Press.

Mayers, D. (1972). Nonmarketable assets and capital market equilibrium under uncertainty. Studies in the Theory of Capital Markets, 1, 223-48.

Miao, B., Ni, C., & Shi, C. (2021). What Affects Factor Loading Uncertainty and Expected Returns? The Role of Accounting Quality. The Role of Accounting Quality (January 10, 2021).

Musbah, A. R., Habtoor, N., & Sritharan, V. (2021). Impact of Leadership Patterns on Customer

Satisfaction. International Journal of Management and Human Science (IJMHS), 5(3), 69-82.

Ng, J. (2011). The effect of information quality on liquidity risk. Journal of Accounting and Economics, 52(2-3), 126-143.

Roll, R. (1977). A critique of the asset pricing theory's tests Part I: On past and potential testability of the theory. Journal of Financial Economics, 4(2), 129-176.

Ross, S. A. (1976). The arbitrage theory of capital asset pricing. Journal of Economic Theory, 13, 341-360.

Rubinstein, M. E. (1973). A mean-variance synthesis of corporate financial theory. The Journal of Finance, 28(1), 167-181.

Salah, H. M. R., & Habtoor, N. (2017). Top Manager’s Intention to Retain Older Employees in Libya Corporates Sector. International Journal of Management and Human Science (IJMHS), 1(1), 1-12.

Salama, S., Habtoor, N., & Isaac, O. (2019). The Proposed Theoretical Framework to Enhance the Impact of the a viability of the Infrastructure of Knowledge Management in Education Sector Staff Performance

Efficiency. International Journal of Management and Human Science, 3(3), 39-56.

Sharpe, W. F. (1964). Capital asset prices: A theory of market equilibrium under conditions of risk. The Journal of Finance, 19(3), 425-442.

Stattman, D. (1980). Book values and stock returns. The Chicago MBA: A Journal of Selected Papers, 4(1), 2545.

Tabouli, E. M., Habtoor, N. A., & Nashief, S. M. (2016). The impact of human resources management on employee performance: organizational commitment mediator variable. Asian Social Science.

Verrecchia, R. E. (2001). Essays on disclosure. Journal of Accounting and Economics, 32(1-3), 97-180.

Watts, R. L., & Zimmerman, J. L. (1986). Positive accounting theory.

Zhang, X. F. (2006). Information uncertainty and analyst forecast behavior. Contemporary Accounting Research, 23(2), 565-590.



How to Cite

Alshaikh, M. A. . (2022). The Impact of of Accounting Information on Stock Returns – Integrative Literature Review. Advancement in Management and Technology (AMT) , 3(1), 13-20.