The Value Relevance of Dividends, Book Value and Earnings in Tehran Stock Exchange

This paper compares the value relevance of book value and dividends versus book value and reported earnings. The main purpose of this study explains which of dividends, book value and earnings are more value relevance. Thus, we have examined 98 firms of Tehran Stock Exchange over a period 1377-1382. Our methodology of examining the information content of various income statement and balance sheet items is based on cross-sectional regressions of share price on the value measures. Four sets of findings are reported. First, overall, the variables, book value and dividends, have almost the same explanatory power as book value and reported earnings. Second, book value has less explanatory power than others. Third, in dividend payers firms, earnings has the most explanatory power, but book value and reported earnings have almost the same explanatory power as book value and dividends. Forth, for firms with transitory earnings, dividends have the greatest explanatory power over the three variables.