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1. Introduction
The objective of general purpose financial reporting is to provide financial information about the business that is useful to present and potential equity investors, lenders and creditors in making decisions in their capacity as capital providers (IASB, 2010). This implies that, financial reporting is not an end in itself. Rather financial reporting must provide the basis in assisting investors of accounting information to choose among alternative use of scarce resources. As a result, accounting information must be useful by making difference in investment decisions. Therefore, value relevance refers to the usefulness of accounting information, and it is defined as the ability of financial statements information to influence stock prices (Francis and Schipper, 1999). According to Bowerman and Sharma (2016), value relevance studies examine the relationship between accounting information and stock market values.
Value relevance research is predominantly significant to investors, accounting practitioners, regulators and other interested parties who make use of accounting information for investment decisions. Moreover, the development of effective capital markets, partly through good accounting, is an important way of promoting growth in the emerging economies (Reddy and Sharma, 2014).
As the seminal works of Ball and Brown (1968), value relevance of accounting information has become an extensive study area for most accounting researchers particularly in the developed capital markets (Omokhudu and Ibadin, 2015). A number of researchers (Bepari, 2015; Collins et al., 1997; Khanagha, 2011; Alfaraih and Alanezi, 2011) have tested the statistical relationship between accounting measures and stock market values or returns focusing particularly on its strength and significance. As a consequence, literature has produced mixed results. Some researchers argue that the usefulness of accounting information has increased overtime (Bepari, 2015; Filip and Raffournier, 2010; Gjerde et al., 2005; Landsman and Maydew, 2002; Collins et al., 1997), while others argue the usefulness of accounting information has declined (Chandrapala, 2013; Khanagha, 2011; Kwon, 2009; Shamki and Abdul Rahman, 2013).
The decline in the usefulness of accounting information has been attributed to shift from traditional capital-intensive economy into a high technology, service-oriented economy (Dontoh et al., 2007; Alfaraih, 2009; Francis and Schipper, 1999). Furthermore, other researchers also contend that the mixed results in value relevance studies are somewhat attributable to econometric problems found in these studies (Brown