The Value Relevance of Accounting Information in Emerging Stock Exchange Markets "Case of Jordan"

Abstract

In a different way from the pervious studies concerning factors affecting individual investors’ decisions in stock markets, this study aimed to assess the value relevance of accounting information for investment decisions, as well as to investigate if investors` demographic and behavior factors affect this value relevance. A questionnaire was developed and distributed to a sample of individual investors in Amman Stock Exchange (ASE). The results indicated that Jordanian individual investors perceive accounting information to be value relevant to investment decisions regardless of their demographic and behavior factors. Also, the study reveled that investment decisions are affected by other factors, such as trading volume, key investors, and company reputation. A secondary result indicated that trading frequency is affected by factors of sex, portfolio size, and monthly income. Finally, the study revealed that individual investors exhibit behavioral biases such as: overconfidence, herd, and personal judgment.

Key Words: Individual investors, Decisions, Accounting information, Value relevance, Amman Stock Exchange.