Investigating the effect of economic uncertainty on the relationship between comparability of financial statements and the stock price crash risk in Tehran Stock Exchange

Subject Areas : Financial Markets and Institutions

Zeinab Rezaei ¹ (Department of Accounting, Shoushtar Branch, Islamic Azad University, Shoushtar, Iran)
fatemeh kiyani ² (MSc. Accounting, Islamic Azad University, ramhormoz Branch, ramhormoz, Iran.)

Received: 2021-06-14 Accepted : 2021-12-01 Published : 2021-11-22

Keywords: ", financial statement comparability", economic uncertainty", stocks price crash risk",

Abstract :

The purpose of this study is to investigate the effect of economic uncertainty criteria on the relationship between the financial statement comparability and the stocks price crash risk in companies listed on Tehran Stock Exchange. To measure stocks price crash risk, the criterion of negative stock skewness was used and to measure the economic uncertainty, three indicators of inflation rate changes, exchange rate changes and economic growth rate changes were used. For this purpose, data related to 119 companies listed on Tehran Stock Exchange for the period from 2014 to 2020 have been analyzed. The research regression model has been investigated and tested using the panel data method with a random effects approach. The results showed that in conditions of economic uncertainty, stocks price crash risk increased and economic uncertainty criteria moderate the negative relationship between financial statement comparability and stocks price crash risk. In addition, the results showed that improving the quality of financial statement comparability facilitates investors’ access to some information not disclosed by company managers, and therefore managers' motivation to accumulate bad news is reduced, resulting in stocks price crash risk. The effect of the sudden release of bad news is reduced.

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