The examination of the relationship between the book value and the enterprise value in financially stressed firms (with serious financial problems)
Journal Title: International Research Journal of Applied and Basic Sciences - Year 2014, Vol 8, Issue 8
Abstract
As a market, the stock exchange provides the required information to the buyers and the sellers of the securities. At any moment, the investors can change their money to the securities and vice versa. On the other hand, the stock exchange organization supplies the accepted firms financiallyby selling their stock in the capital market. One of the most important issues for the investors and the creditors in the stock exchange is the usefulness of the information presented by the accounting system to the financially stressed firms. Financial stress and bankruptcy result in huge costs causingirreversible damages to the economy of a country. One of the solutions that can prevent from wasting the financial and economical resources is to give useful accounting information to help the investors find a suitable place for investment. In this research, the relationship between the book value and the value of the enterprises with serious financial problems is examined. The reports published by the website of the stock exchange organization and the software of the financial information of the firms accepted in the exchange and TadbirPadaz Software are used to collect the financial data. The tool of data collection is the financial statements and the auditing reports. The population of this research includes the firms accepted in Tehran's stock exchange being active from 2000 to 2010. All of the firms to which the article 141 applied were studied to test the hypothesis. Then, the firms whose financial statements were available for a five year period before removing the symbol and whose information was not incomplete and were not in the group of the financial and investmentcompanies, institutions and banks were identified and Pearson's correlation coefficient was calculated based on the time series correlation method to be able to support or reject the hypothesis. The results of the research show that as the firms become bankrupt, the relationship between the book value of the assets and the enterprise value weakens.
Authors and Affiliations
Hamze Hesari| Correspondig Author, Department of Accounting, Kosar University, Bojnourd, Iran, email:hamzehesari@yahoo.com, NarjesKamali Kermani| Faculty of Management & Accounting, Bojnourd University, Bojnourd, Iran, MohammadHosein Basirzade| Master of accounting
Keywords
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