Value Relevance of Accounting Information on Stock Price in Plantation Companies in Sri Lanka

Accounting information plays a crucial role in influencing financial decision-making processes and governing activities in the business world. Investors and governments are the primary stakeholders in accounting information. Dependable and precise accounting information will enhance the value for users of accounting information. This study aims to evaluate the significance of accounting information (specifically Earnings per share and Net Asset Value per share) on the stock market prices of registered plantation companies in the Colombo Stock Exchange of Sri Lanka. The study relies on the publicly available financial statements of the plantation companies spanning a period of five years, specifically from 2015 to 2022. Regression analysis was employed to examine the correlation between accounting information and market prices. According to beta coefficients, a Rs.1 increase in EPS raises the market price per share by Rs.0.32 NAVPS and market price per share are also positively correlated. Share prices are negatively correlated with Total Assets, which is surprising. The study found that EPS and NAVPS significantly affect Sri Lankan plantation companies' market price per share (MPS). The MPS benefits greatly from these factors. However, the study shows that total assets (TA) negatively affect MPS. Sri Lankan investors clearly value accounting data when investing. This indicates that investors of Sri Lankan companies place a higher level of importance on accounting information when making investment decisions.