EXPLORATORY STUDY ON THE IMPLICATIONS OF FINANCIAL REPORTING ON RETURN OF SHARES

In terms of informational value, financial reports released by listed firms provide a comprehensive picture of a company s financial health and viability. They are also a crucial tool for determining a company s capacity to create shareholder value. The current study uses correlation and multiple regression analysis to analyse the implications of pertinent financial indicators in the process of making investment decisions, specifically their impact on the stock market performance of securities traded on the Bucharest Stock Exchange. A sample of Romanian businesses operating in the sales, services, and industrial sectors for nine fiscal years has been included in the study. The findings indicate that the stock return and price-to-book ratio (PBR) are not significantly impacted by ROE, turnover increase, or auditor reputation (Big 4, Non-Big 4). However, the implications of leverage, industry sector, and company size are significant in relation to the evolution of PBR, and in the case of stock returns, the asset structure shows considerable predictive power. Consequently, even though a company s financial performance serves as the main benchmark for stock market investments, the evolution of other variables, such as financial leverage and firm size, has a greater impact on the sample of Romanian firms under analysis when it comes to determining the variation in the performance of stocks. This highlights the fact that an overall analysis of the economic situation and reported accounting information is necessary to determine the efficiency of investing capital in financial instruments.