A Study on the Relationship between Social Responsibility, Earnings Transparency and Stock Price Crash Risk

Zekvan Imani, Ali Homayoon, Olia Hajizadeh

Abstract


Stock price crash is a phenomenon in which the stock price suffers a severe and abrupt negative adjustment. One of the most important ways to manipulate accounting information is to accelerate the identification of good news versus delaying the recognition of bad news in earnings. However, there is always a final level of accumulation of bad news in the corporate and reaching the final level, the bad news will be published all at once. This leads to a fall in stock prices of the corporate. The main objective of this study is to investigate the relationship between social responsibility, earnings transparency and stock price crash risk in listed corporates on Tehran Stock Exchange. The studied sample of this research includes 95 listed corporates on Tehran Stock Exchange from 2009 to 2013. Multivariate regression is used to test the hypotheses of this study. The overall results of the research indicate that there is a negative significant relationship between social responsibility, earnings transparency, and crash risk. That is to say, the more the social responsibility and earnings transparency increase, the less the crash risk will be.

Full Text:

PDF

References


Khaleghi Moghadam, H., Khalegh, A. (2009). Corporate transparency in Iran and its effective factors. Accounting Studies, No. 21, pp. 32-60 (Persian).

Jafari, M. R. (1993). The theory of social accounting, Accounting Investigations, No. 2, pp. 78-89.

Barth, M. E., Konchitchki, Y., Landsman, W.R. (2008). Cost of Capital and Earnings Transparency, Working Paper, Stanford University and the University Of North Carolina at Chapel Hill. Available At URL: http://www.ssrn.com.

Jin, L., Myers, S. C. (2006). R2 around the world: New theory and new tests. Journal of financial Economics, 79(2), PP. 257-292.

Hutton, A. A., Marcus, et al. (2009). Opaque financial reports and the distribution of stock returns. Journal of financial Economics, 94, PP. 67-86.

Dianati Dailami, Z., & Lotfi, M., & Azad Bakhsh, K. (2012). The impact of working capital management based on the cash conversion cycle (Gitman) on the reduction of stock price crash (falling) risk, Research Scientific Journal, Knowledge of Accounting and Audit Management, First Year, Issue IV, pp. 55-61.

Sanders, D.R. S.H. Irwin, and R.P. Merrin. (2010). The Adequacy of Speculation in Agricultural Futures Markets: Too Much of a Good Thing?. Applied Economics Perspectives and Policy, 32, PP.77–94.

Kim, J. V, Y. Li, and L. Zhang. (2010). Corporate Tax Avoidance and Stock Price Crash Risk: Firm-Level Analysis. Journal of Financial Economics (JFE), Forthcoming.

Kim, Yongtae. Li, Haidan. Li, Siqi. (2014). Corporate social responsibility and stock price crash risk, Electronic copy available at: http://ssrn.com/abstract=2397629.

Hamm, Sophia J. W. and Li, Edward Xuejun and Ng, Jeffrey, Management Earnings Guidance and Stock Price Crash Risk (September 28, 2015). Singapore Management University School of Accountancy Research Paper No. 2014-10. Available at SSRN: http://ssrn.com/abstract=2055008 or http://dx.doi.org/10.2139/ssrn.2055008

Francis, B., Iftekhar, H., Lingxiang, L. (2012). Firms’ Real Earnings Management and Subsequent Stock Price Crash Risk", Electronic copy available at: http://ssrn.com/abstract=1740044.

Callen, J.L., Fang, X. (2011). Institutional investors and crash risk: Monitoring or expropriation? Working paper, University of Toronto and Georgia State University.

Forooqi, D., Amiri, H., Mirzaee, M. (2012). The impact of the lack of transparency of financial information on the risk of future falls in stock prices of listed companies on Tehran Stock Exchange, the Financial Accounting Research Journal, Third Year, Fourth Number, Serial Number 10 , pp. 15-40 (Persian).


Refbacks

  • There are currently no refbacks.


Creative Commons License
This work is licensed under a Creative Commons Attribution-NonCommercial 4.0 International License.

World of Researches Publication