The impact of accounting value relevance and pricing errors on stock prices in high-technology service companies

Abstract

This study investigates the influence of key accounting ratios on the stock prices of high-technology service companies across five countries: the United States, Japan, China, the United Kingdom, and France. By analyzing the annual reports of 326 enterprises, the research focused on three specific financial metrics—diluted earnings per share, revenue per share, and book value per share—and their relationship with stock price movements in this industry. The findings reveal that both diluted earnings per share and book value per share have a significant impact on stock prices, while revenue per share does not appear to affect stock valuation in this sector. Additionally, the study identifies a moderate level of pricing error between the intrinsic value and market value of stocks, with some countries experiencing higher discrepancies than others. Overall, this research sheds light on the extent to which accounting ratios drive stock price fluctuations in high-technology services, offering valuable guidance to investors seeking to understand the most relevant financial indicators in this dynamic industry.