The impact of environmental news on stock prices of companies listed in Tehran Stock Exchange

Subject Areas : Journal of Investment Knowledge

zahra dianati dalami ¹ (Associate Professor of accounting, Faculty of financial sciences, Kharazmi University, Tehran, Iran (Corresponding Author))
Elham Khodakarami ² (MSc of accounting, Faculty of financial sciences, Kharazmi University)

Received: 2017-04-30 Accepted : 2017-07-11 Published : 2017-10-23

Keywords:

Abstract :

In this study, the behavior of investors and the stock price have been paid to the environmental news and investors' reaction is studied to the favorable and unfavorable news. For this purpose, the standard methodology of events (event study) is used. The range of events includes 11 days (5 days before to five days after the announcement) has been considered. The research population, firms listed in the Tehran Stock Exchange is between the years 2010 to 2016. Abnormal returns are calculated according to market-adjusted return. The results show, that positive environmental news boosts stock prices and positive reaction of investors but negative environmental news release impact on stock prices, and investors also associated with lack of response. On the other hand, when good environmental news is released, the investor’s interest increase to buy stocks. But when bad environmental news is released, 11-day period, It does not impact on stock price  and confirms the Sullivan(2016) theory which  says committed investors to social responsibility show a positive reaction to good environmental news of firms.

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