Usefulness of financial information in evaluation of BRIC firms

The hottest investments in the past five years have been in BRIC country stocks. Results of this study show that during 2002-2006 time period financial ratios of BRIC firms have not improved while the sizes of these firms have significantly increased, suggesting that investors are investing not because of financial performance but because of growth. Despite the opacity of BRIC countries' financial reporting, results of this study show that there is still a positive and significant price-earnings association. The explanatory power is increased by also considering growth rates.