The effect of corporate governance mechanisms on the value relevance of accounting information: An empirical study on companies listed on the Egyptian stock exchange

This research aimed to study and examine the effect of corporate governance mechanisms on the value relevance of accounting information. To achieve this goal, the researcher derived the hypotheses of the research and tested these hypotheses by conducting an empirical study using sample data of 77 non-financial companies listed on the Egyptian stock exchange during the period from 2016 to 2018. Through multiple linear regression analysis, the study found that there is a positive and significant effect of both earnings per share and book value per share on the share price. The study also found that the independence of the board of directors and the CEO duality do not affect the value relevance of accounting information. While the effectiveness of the audit committee and the audit quality affect the value relevance of accounting information, the activity of the board of directors affects the value relevance of the earnings per share information and does not affect the value relevance of the book value per share information.
The researcher conducted an additional analysis by inserting company size and financial leverage as control variables in the two study models. The study found that there is a positive and significant effect of company size on stock prices in both models. As for the financial leverage, the study found that there is a negative and insignificant effect of financial leverage on stock prices in the first model, while there is a negative and significant effect in the second model. To verify the accuracy of the main findings of the research, the researcher performed a sensitivity analysis, where the method of measuring the stock prices was changed, as the measurement was made based on the closing price of the stock three months after the end of the financial year instead of the closing price of the stock on the first working day following the date of the auditor’s report or the first Trading session after issuing the auditor's report. Multiple linear regressions were re-analyzed at the level of the two study models, and the results were almost identical to the fundamental model.