Abstract

This study investigated how market share and its increase rate affect value relevance, through which I intended to show that accounting income, net asset and market share are significant factors to determine stock value. In order to verify this hypothesis, the present study analyzed 9,315 listed firms from 1999 until 2008. The results of this research are the following. First, the higher market share companies have the higher its stock value determined by accounting income and net asset becomes. Second, the companies of increased market share over the previous year have higher value relevance than the companies of decreased market share. Third, 4 business groups were classified according to market share difference and the increase and the decrease of market share, and then it turned out that the business group of higher market share and increasing market share has higher value relevance of accounting information than the other case. Fourth, I divided market share into 6 ranges：below 0.1, over 0.1～below 0.2, over 0.3～below 0.4, over 0.4～below 0.5, and over 0.5. Then, I analyzed the value relevance of accounting information. The results show that the value relevance of accounting information gets higher as market share increases；however, the relevance of net asset is higher only in the case of over 0.5. The contributions of this research are the following. Market share may be an important decision－making information for investors since this study showed that higher market share and increased market share over the previous year lead to a higher stock value determined by accounting profits and net assets.

Keywords

• market share
• increase rate of market share
• value relevance

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