The Value Relevance of Book Value, Earnings Per Share and Cash Flow: Evidence of Tunisian Banks and Financial Institutions

Abstract

Value relevance can be measured as the statistical association between accounting information and stock
price valuation. Using a sample of available financial firms listed in the Tunisian stock exchange during
the period 2010 to 2016, the purpose of this paper is to investigate the relative value relevance of book
value, earnings and cash flows in security prices. We find that book value, earnings and cash flow are
significantly and positively related to the firm value. Also, the using of these variables jointly is positive
related to the firm stock price share. Comparatively, we obtain evidence that book value is statistically
more value relevant than earning per share models, expectedly the earnings explains a high proportion of
the stock price for the group of financial institutions more than the banks. The paper use recently
available accounting data, and proposed an improvement concerning the measure of value relevance of
accounting value relevance.