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The Effect of Earnings Forecasts Quality on Risk Taking and Firm's Value in Firms Listed in Tehran Stock Exchange


Affiliations
1 Department of Accounting, Science and Research Branch, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
2 Department of Accounting, Urmia, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
3 Department of Accounting, Urmia Branch, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
     

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The aim of this study is to investigate the effect of earnings forecasts quality on risk taking and firm's value in firms listed in Tehran Stock Exchange (TSE). To do so, 135 firms listed in TSE are selected to be studied during the period from 2006 to 2012 using regression and correlation tests. Earnings forecasts quality is captured by two proxies of earnings forecast accurateness and earnings forecast frequency. In addition, risk is broken into systematic and unsystematic risks and firm's value is captured through Tobin's Q. The results show that frequency of earnings forecasts has a negative and earnings forecasts has a positive significant effect on unsystematic risk of firms listed in TSE. These results suggest that with increasing earnings forecasts quality, unsystematic risk decreases. In addition, the study fails to find a significant relationship between earnings forecasts quality with systematic risk and firm's value.

Keywords

Earnings Forecasts Quality, Risk Tasking, Firm's Value, Tehran Stock Exchange.
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  • The Effect of Earnings Forecasts Quality on Risk Taking and Firm's Value in Firms Listed in Tehran Stock Exchange

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Authors

Tarlan Aghazadeh
Department of Accounting, Science and Research Branch, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
Saeid Jabbarzadeh Kangarlouei
Department of Accounting, Urmia, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of
Morteza Motavassel
Department of Accounting, Urmia Branch, Islamic Azad University, West Azarbyjan, Iran, Islamic Republic of

Abstract


The aim of this study is to investigate the effect of earnings forecasts quality on risk taking and firm's value in firms listed in Tehran Stock Exchange (TSE). To do so, 135 firms listed in TSE are selected to be studied during the period from 2006 to 2012 using regression and correlation tests. Earnings forecasts quality is captured by two proxies of earnings forecast accurateness and earnings forecast frequency. In addition, risk is broken into systematic and unsystematic risks and firm's value is captured through Tobin's Q. The results show that frequency of earnings forecasts has a negative and earnings forecasts has a positive significant effect on unsystematic risk of firms listed in TSE. These results suggest that with increasing earnings forecasts quality, unsystematic risk decreases. In addition, the study fails to find a significant relationship between earnings forecasts quality with systematic risk and firm's value.

Keywords


Earnings Forecasts Quality, Risk Tasking, Firm's Value, Tehran Stock Exchange.

References