EMPIRICAL ANALYSIS OF FINANCIAL ACCOUNTING INFORMATION RELEVANCE OF ROMANIAN LISTED PHARMACEUTICAL COMPANIES
West University of Timișoara, Doctoral School of Economics and Business Administration, Timișoara, Romania
Abstract: Financial reporting aims to provide financial and economic information about a company, which is useful for internal and external users, in order to provide the basis for business decisions. The business area needs to pay close attention to the information in financial reporting, whether it belongs to the entity’s internal environment or the external environment, to use the information as efficiently as possible. Financial information most frequently is used through the analysis conducted on indicators calculated with the help of the summary and reporting documents for the financial year. This paper aims to analyze the main factors that make a significant contribution to the relevance of financial information. To achieve our target, we have carried out an empirical analysis of panel data on a sample of five pharmaceutical companies listed on the Bucharest Stock Exchange. The period considered was five years, since financial years were included in this period, which had been conducted under similar conditions, but also surprised a financial year in which most of the areas of activity suffered. The data were collected based on the companies’ annual financial reports. The present study confirms that both the net income and the comprehensive income of the year have a substantial impact on the relevance of the financial accounting information. In addition, according to the present study, the main drivers of the relevance of financial information are ROE (Return on equity), ROA (Return on assets), profit margin rate, and LEV (leverage).
Keywords: financial accounting information, pharmaceutical industry, net income, comprehensive income, panel data.
