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

Journal of Commerce and Accounting Research

Volume 3 Issue 3

Published: 2014
Author(s) Name: Tarlan Aghazadeh, Saeid Jabbarzadeh Kangarlouei, Morteza Motavassel | Author(s) Affiliation: Islamic Azad University, West Azarbyjan, Iran
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The aim of this study is to investigate the effect of earnings forecasts quality on risk taking and firms 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 firms value is captured through Tobins 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 firms value.

Keywords: Earnings Forecasts Quality, Risk Tasking, Firms Value, Tehran Stock Exchange

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