The impact of foreign exchange rates liberalization on the evaluation role of accounting information with application in Egypt

Document Type : Original Article

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Accounting Department Faculty of Commerce Alexandria University Alexandria Egypt

Abstract

The purpose of the study is to examine the effect of floating exchange rates on the value relevance of the accounting information in the emerging capital market of Egypt.The regression models are estimated to investigate the value relevance of earnings, book value of equity and cash flows from operations, and changes therein  between ( 20142016) (period of floating exchange rate in Egypt).The findings suggest that the value relevance of the book value of equity and cash flows from operations have increased and that of earnings has decreased during period of floating exchange rate. The change in value relevance of accounting information after the devaluation may be attributable to increase uncertainty and risks during the period of floating exchange rate .The paper’s findings provide insights on the applications of the value relevance of the accounting information and the impact of economic changes such as floating exchange rate, which has direct implications for regulators, standards setters, academics and practitioners.

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