The Relevance of Accounting Information and Its Influence on Investment Decisions in the Capital Market

Abstract

Accounting information plays a central role in supporting capital market efficiency by providing relevant and reliable data to investors. The relevance of accounting information can be observed through its ability to influence rational investment decisions. This study aims to analyze the relevance of accounting information to investment decisions in the capital market using a literature review approach from selected international journals published in the last five years. The findings reveal that relevant accounting information, such as net income, cash flows, and book value of equity, significantly contributes to shaping investor expectations and influencing stock prices. Moreover, the integration of financial reporting with International Financial Reporting Standards (IFRS) further enhances the usefulness of information for investors. The study underscores the importance of improving the quality of financial reporting as a means to strengthen market confidence and enhance the efficiency of investment decision-making. These insights are particularly useful for policymakers, financial analysts, and corporate decision-makers aiming to improve transparency and investor trust in the capital market environment.