Effects of Forward-looking Information Disclosure on Stock Price Response in External Environment Uncertainty

Subject Areas : Journal of Investment Knowledge

Seyed Mohammad Reza Masoudian ¹ (PhD student, Department of Accounting, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran)
Yousef Ahadi Serkani ² (Assistant Professor, Department of Accounting, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran)
mohammad mahmoodi ³ (Associate Professor, Department of Accounting, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran)
Saleh Ghavidel ⁴ (Associate Professor, Department of Economics, Firoozkooh Branch, Islamic Azad University, Firoozkooh, Iran)

Received: 2021-04-20 Accepted : 2021-04-24 Published : 2022-03-21

Keywords: Z Wong test, Savara method, Uncertainty, stock price response, forward-looking information disclosure,

Abstract :

Forward-looking information or statements refers to information that has a future semantic burden. This information includes information about the company's future that may later be presented as historical information (actual results). Forward-looking information presents the manager's beliefs and expectations as factors affecting the company's performance and providing assumptions and assumptions to shareholders and investors. The primary purpose of this study is to investigate the effect of forward-looking information disclosure on stock price response. For this purpose, the data of 140 manufacturing companies listed on the Tehran Stock Exchange and Over-the-counter (OTC) stock market during the years 1394 to 1398 are analyzed through combined data. In order to investigate the effect of forward-looking information disclosure on stock price response, Olson (1995) model is used. Then through the Z Wong test, the significance of Olson (1995) model determination coefficients and the first hypothesis model are compared. Also, to measure the disclosure of forward-looking information, the impact of forward-looking words is first examined by financial analysts following research (Hassanin and Hosseini, 2015). Using the Savara method, one of the multi-criteria decision-making methods, words influencing investors' decisions, is weighted. The results of the first hypothesis show that the disclosure of forward-looking information in the studied samples did not have a high information load and did not cause a stock price reaction. The second hypothesis results show that the two criteria of external uncertainty (sales change coefficient and P/E change coefficient) positively and significantly affect the relationship between forward-looking information disclosure and stock price response.

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