The Value Relevance of Consolidated Financial Statements Information as Compared With the Separate Financial Statements of the Parent Company

The main objective of financial statements is to provide information about the financial position، financial performance and business flexibility، which can be useful for a wide range of users of financial statements in making economic decisions. Financial information should be related to the decisions of users، including investors. In Iran’s financial standards، parent companies are required to give both consolidated financial statement as well as non-consolidated (parent- only) financial statement. Hence، the following questions arises- which one of these two sets has a higher value relevance and thus، can provide the required information to investors and other users. In this study، the value relevance of information of consolidated and non-consolidated financial information of member companies in Tehran Stock Exchange (TSE) has been studied، for a period of 6 years، the years 2007 to 2012. The multiple regression models based on stock price valuation approach are used to test hypotheses and investigate the relation between consolidated and non-consolidated accounting information، and stock price. According the results of the F-Limer and Hausman tests to estimate each of the models، the panel data with fixed effects are used. Research findings suggest that the consolidated accounting information has a higher value relevance than non-consolidated accounting information. In other words، the consolidated accounting information has more information content. In addition، the results indicate that the information provided in both consolidated financial statement and parent- only financial statement together، has more value relevance than consolidated financial statement.