Corporate Transparency And Impact of Investor Sentiment on Stock Prices

• Main Authors: javad shekarkhah, قاسم بولو, asem hazrati
• Format: Article
• Language: fas
• Published: Alzahra University 2018-02-01
• Series: پژوهش‌های تجربی حسابداری
• Subjects: Investor Sentiment; stock prices; corporate transparency
• Online Access: http://jera.alzahra.ac.ir/article_3065_61e9c3ee5b9081f09a0cf2ad3996a777.pdf
• ISSN: 2251-8509; 2538-1520

This study is aimed to examine the effects of corporate transparency (measured by some proxies including accruals-based earnings management, audit opinions, the quality of audit firms, state ownership and the related party transactions) on the investors' optimism and pessimism toward stock prices, which usually occur due to difficulties in firm valuations. To highlight the important role of corporate transparency in decision making of investors, we test five hypotheses. For this purpose, monthly data of 70 firms listed in Tehran Stock Exchange during the period from 2009 to 2014 is analyzed through the time series analysis. The findings approves the first, second, fourth and fifth hypotheses suggesting more effects of investor sentiment on stock prices in firms with more accruals-based management, unqualified audit reporting, more related party transactions and State-controlled firms, as compared to  firms with less accruals-based management, qualified audit reporting, less related party transactions, and private companies. Also, in respect to the third hypothesis which is not confirmed, the findings show that there is no significant difference between investor sentiment effects on stock prices in firms audited by the Audit Organization and those of firms audited by the other audit institutions. As a whole, the findings confirm the important role of corporate transparency in mitigating the effects of investor sentiment on stock prices.