Evolving Relationship between Share Prices and Accounting Variables During Firm Life- Cycle Stages by Hierarchical Bayesian Analysis

The general purpose of this paper is to review the relevance of accounting variables to describe the evolving of a company’s share price in life-cycle stages (Growth، Mature and stagnant stages). Specifically، this paper analyses the influence of cash flow from operations (CFO) and book value of equity (BVE) during 2002-2008 on the evolving of the share price، taking into account certain control variables which have traditionally been regarded as an explanation for this effect. A hierarchical Bayesian model applied to analyze the relevance of the accounting figures considered by the markets. The algorithm is designed in Open BUGS software. The obtained Results showed that book value of equity is more relevant than cash flow from operations to evolving varies of share prices. The obtained empirical results showed that the return and the speed of asset turnover are a company’s most relevant features. Although، in capital market of Iran، book value of equity is more relevant than cash flow from operations in mature stages، Growth and stagnant stages are as relevant as among those variables.