To Study The Effect of Investor Protection on Future Stock Price Crash Risk

Advances in Mathematical Finance and Applications

دوره 6، شماره 2، تیر 2021، صفحه 393-407   

نوع مقاله: Research Paper

شناسه دیجیتال (DOI): 10.22034/amfa.2020.1877598.1287

نویسندگان

Hassan Valian¹؛ Fatemeh Jalali^{* 2}؛ Mehdi Darvishan¹؛ Mohamad Mehdi Mohamadi¹

¹Department of Accounting, Shahrood Branch, Islamic Azad University, Shahrood, Iran.

²Faculty of Economic & Management, Semnan University , Semnan, Iran.

چکیده

Managers are responsible for providing financial statements and they might try to make a good picture of their firm's conditions. Therefore, they try to delay the disclosure of bad news and release the good news as soon as possible. The ten-dency of managers toward hiding bad news increases the stock price crash risk. The protection of investor is one of the factors that can prevent from falling stock price, because it restricts the managers and majority shareholders in frauding and hiding bad news. Thus, the main purpose of the present research is to study the effect of investor protection on future stock price crash risk. In this research, 89 companies from listed companies in Tehran Stock Exchange during 2011-2017 were tested. The results obtained from the research's hypothesis test showed that protecting the rights of investors has a negative effect on the stock price crash risk. In fact it can be concluded that with the increase of the investor protection, the firms are obligated to disclose the high-quality accounting information and present more transparent financial reporting, as a result, the information asym-metry will be reduced and by creating a flow of information between the manag-ers and the investors and thus failure to accumulate bad news in the company, the risk of the stock price crash will be also reduced.

کلیدواژه‌ها

Investor protection؛ Future Stock Price Crash Risk؛ Corporate governance

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