Investigating the Relationship between Political Uncertainty and Market Irregularities: With Emphasis on the Risky Information Environment

محورهای موضوعی : Financial Accounting

Hossin Sharifirad ¹ , negar Khosravipoor ² , sina kheradyar ³ , Mohammadreza Vatanparast ⁴

1 - PhD Student, Department of Accounting, Qazvin Branch, Islamic Azad University, Qazvin, Iran
2 - Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran
3 - Assistant Professor, Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran
4 - Assistant Professor, Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran

تاریخ دریافت : 1400/01/21 تاریخ پذیرش : 1400/04/14 تاریخ انتشار : 1401/10/11

کلید واژه: Accrual Anomaly, Normal Stock Anomaly Cost, Firm Size, Political Uncertainty,

چکیده مقاله :

investors and managers are always faced with uncertainty in the information environment, which uncertainty can be due to factors such as the synchronization of stock returns, extraordinary fluctuations in stock returns and the number of equations. The purpose of this study is to investigate the political uncertainty caused by the size of the firm under the influence of risky information environment, the irregular behavior of accruals anomaly and the anomaly behavior of the cost of normal stock equity of companies. For this purpose, the data of 99 companies listed on the Tehran Stock Exchange and Iran TSETMC during the years 2009 to 2019 were examined and tested through combined data. The results showed that the political uncertainty caused by the firm size affected the concurrency stock returns with the optional accrual anomaly behavior and the cost of normal stock equity behavior of companies has a positive and signification relationship. The results also showed that the political uncertainty caused by the firm size is affected by the extraordinary fluctuation of stock returns with the optional accrual anomaly behavior and the cost of normal stock equity behavior of companies has a positive and signification relationship. In addition, the political uncertainty caused by the firm size is affected by the number of equations with the optional accrual anomaly behavior and the cost of normal stock equity behavior of companies has a positive and signification relationship.

منابع و مأخذ:

[1] Sloan, R. Do stock prices fully reflect information in accruals and cash flows about future earnings? The Accounting Review, 1996, 71(4), P. 289-315. Doi: 10.1108/IJLMA-12-2017-0294

[2] Jaafar Nodeh, A., Safari Gerayli, M. Political Connections and Related-Party Transactions: Evidence from Iranian Firms. Advances in Mathematical Finance and Applications, 2020, 5(3), P.319-330.

 Doi:10.22034/amfa.2019.581375.1154

[3] Zhang, X. F. Information Uncertainty and Stock Returns. Journal of Finance, 2007, 61(2), P.105–137.

Doi: 10.1080/20430795.2021.1879560

[4] Trinugroho, I. & Rinofah, R. The Effect of Mispricing on Investment of Indonesian Firms: Do Financial Constraints Matter? Middle Eastern Finance and Economics, 2011, 9 (1), P.14-23.

[5] Pantzalis, C., Park, J. C. Agency Costs and Equity Mispricing. Asia-Pacific Journal of Financial Studies, 2014, 43(2), P.89–123. Doi: 10.1016/j.bar.2020.100973

[6] Rezaei, F., Weysihesar, S. The effect of political connections with the government on the relationship between ownership concentration with quality of financial reporting and the cost of equity capital, Accounting and Auditing Review, 2014, 21(4), P.449-470. (In Persian).

[7] Shahryary, Sara and Salim, Farshad. Investigation and testing of incorrect pricing of unusual accruals in the Tehran Stock Exchange during the years 2002 to 2010. Asset Management and Financing, 2014, 2(3), P.1-16. (In Persian). Doi: 10.1108/SAMPJ-04-2020-0113

[8] Zach. T., Evaluating the ‘accrual-fixation’ hypothesis as an explanation for the accrual anomaly, Washington University, working paper. 2004.

[9] Shi, L., Zhang, H. Can the earnings fixation hypothesis explain the accrual anomaly? Working paper, 2007.

[10] Khan, A., Dessalegn, G., Mihret, Badrul Muttakin, M., Corporate political connections, agency costs and audit quality, International Journal of Accounting & Information Management, 2016. 24(4), P.357-374. Doi: 10.1016/j.spc.2018.01.002

[11] Fan, J.P.H., Wong, T.J., and Zhang, T., Politically-connected CEOs, corporate governance, and post-IPO performance of China,s newly partially-privatized firms, Journal of Financial Economics, 2007, 84(2), P.330-357.

[12] Gaderi, B., Didar, H., Kafami, M., Political Costs and Tax Gap. Empirical Research in Accounting, 2019, 9(2), P.161-194. (In Persian).

[13] Fakhari, H., Rezaei Pite Noei, Y. Provide a model for measuring the company's information environment. Financial Accounting Quarterly. 2016, 9(33), P.121-147. (In Persian). Doi: 10.1016/j.jclepro.2018.06.194

[14] Francis, J., R. Lafond, P. Olsson., Schipper, K. The Market Pricing of Accruals Quality. Journal of Accounting and Economics, 2005, 39(2), P.295-327. Doi: 10.1002/csr.1961

[15] Boubakri Narjess, Omrance Guedhami Dev Mishra, Walid Saffar. Political connections and the cost of equity capital, journal of corporate finance journal, 2012, 18(3), P.547-559. Doi: 10.1002/bse.2657

[16] Desai, H., Rajgopal, S., Venkatachalam. M., Value-glamour and accruals mispricing: one anomaly or two? The Accounting Review, 2014, 79(3), P.355-386. Doi: 10.1108/JAOC‐11‐2013‐0092

[17] Chan, L-C Ann; Edward Lee and Stephen Lin. The Impact of Accounting and Business Research, 2009, 40(1), P.178-192. Doi: 10.1108/JAOC‐11‐2013‐0092

[18] Valian, H., Jalali, F., Darvishan, M., Mohamadi, M. To Study the Effect of Investor Protection on Future Stock Price Crash Risk, Advances in Mathematical Finance and Applications, 2021, 6(2), P.393-407.

Doi: 10.22034/amfa.2020.1877598.1287

[19] Robert, Hagerman, L zmijewski. Mark. Some Economic Determinants of Accounting Policy Choice, Journal of Accounting and Economics, 1987, 1, P.141-161. Doi: 10.1108/JIC-08-2020-028                                                                  

[20] Pan, X., Tian, G. G., Political connections and corporate investments: Evidence from the recent anti-corruption campaign in China, Journal of Banking and Finance, In Press, 2017.

[21] Wang, L., Protection or expropriation: Politically connected independent directors in China, Journal of Banking & Finance, 2015, 55, P.92-106. Doi: 10.1108/SAMPJ-08-2016-0046

[22] Lee, W., Wang, L., Do political connections affect stock price crash risk? Firm-level evidence from China, Review of Quantitative Finance and Accounting, 2016, 1, 1-34.

 

[23] Hosseinzadeh Zorofchi, G., Heidarzadeh Hanzaei, A., Hasani, M., Investigating the Effect of Business Strategy and Stock Price Synchronicity on Stock Price Crash Risk, Advances in Mathematical Finance and Applications, 2021, 6(2), P.335-356. Doi: 10.22034/amfa.2019.585637.1187

[24] McNichols, M., Discussion of the Quality of Accruals and Earnings: The Role of Accruals Estimation Errors, the Accounting Review, 2002, 77, P.61–9. Doi: 10.1002/csr.1961