The Extent of Reliance on Accounting and Economic Information to Analyze the Variances in the Market Price of Stocks and Rationalizing Investments in Palestine Securities Exchange

Abstract

The objective of this study is to determine the extent of reliance on

the accounting and economic information in explaining the variances

in the market prices of stocks and rationalizes the investment decisions

on the market securities exchange.The case study is on the companies

listed on Palestine securities exchange during the years 2004- 2011.The

sample size consists of 14 companies divided into five sectors: study

uses annual, quarterly stock prices and other accounting and economic

information, a set of statistical and the use of Correlation and Regression

Method to test the main hypotheses.The statistical analysis indicates

that there is a significant positive relationship between the book value,

rates of return on equity and exchange rates on the one hand, and the

quarterly stock prices on the other hand.The accounting information can

explain the differences in stock prices with a greater degree of economic

information.The main recommendations of this study are: 1- there is a

need for the Palestinian stock market investors to build their investment

decisions on the basis of accounting information, particularly on the

basis of the book value and the rate of return on equity greater degree

of economic information, and 2- thee is a need for companies to deploy

a unified set of accounting ratios with quarterly reports and annual

so that the investor can evaluate the performance of these companies

before making decisions to buy or sell the stock