Model of the Reaction of Investors and Creditors to Financial Reporting and Behavior of Quarterly Earnings

Document Type : Original Article

Authors

1 PhD Student in Accounting, Islamic Azad University, Bandar Abbas Branch

2 Department of Accounting and Finance, Faculty of Humanities, Islamic Azad University, Bandar Abbas Branch, Bandar Abbas, Iran

3 PhD in Accounting

10.22034/iaar.2020.107132

Abstract

The core value of the profit depends on the disclosure of information not disclosed by other sources, and the information content of its profit and value depends only on the amount of information that the market provides. It's time to expose, delay, and hurry in revealing good and bad news that investors and creditors are responding to. For this purpose, in this research, we have tried to test assumptions based on four different modes of earnings expectations, each of which has different news stories. To do this, the data of 255 Tehran Stock Exchange companies using the combined data regression model for the years 2009 to 1396 were analyzed. The results show that it is possible to predict earnings and unusual stock returns by examining the path of expectations generated by corporate profits. But information content can’t be modeled on seasonal benefits. We can’t model the behavior of creditors when there is continuity of good news and lack of good news, but when we continue to hear bad news and not keep up with bad news, we can model the behavior of creditors using credit risk.

Keywords

Accounting and Auditing Research
Volume 12, Issue 45
April 2020
Pages 201-218

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