The value relevance of accounting information in the Italian and UK stock markets

The research is aimed at verifying the value relevance of accounting information with reference two different stock markets: the UK and the Italian one. Starting from the Edward, Bell and Ohlson’s approach, different regression models have been implemented, analysing – for a three year period (2011-2013) – a sample of 100 companies listed on the Milan Stock Exchange and on London Stock Exchange and ranked by market capitalization. We report two primary findings. First, evidence shows the greater value relevance of accounting information in Italy than in UK, even if this result must be explained according to the sample’s characteristics. Second, the study underlines that in Italy the most value relevant accounting data refer to earnings while in the UK the focus is mainly on cash flows.