The Relation between Social Trust and Investors' Reaction to Earning Announcement and the Impact of Earning Quality and Delay in Reporting on this Relation

Document Type : Research Paper

Authors

1 central tehran branch islamic azad university

2 central Tehran branch islamic azad university

Abstract

In the financial markets, the information can be reported as signs, symptoms, news and various predictions from inside or outside of a firm in order to be available for shareholders and stimulate their reaction. There are many factors which affect the investors reaction to information disclosed and since the characteristics of companies are different, investigating the factors effective on investors' reaction is necessary for increase of capital markets efficiency. So this study is aimed to examine the relation between social trust as a behavioral stimulus and the most obvious feature of social capital, and the investors' reaction to earning announcement, as well as the impact of earning quality and delay in reporting on this relation. The sample consists of 210 professional investors in 70 firms listed in Tehran Stock Exchange. The results indicate that the level of social trust in the capital market is relatively moderate and the trust itself has no effect on the investors' reaction. Then the study examines the impact of the two variables earning quality and delay in reporting on the relation between social trust and investors' reaction and results show that this relation is affected by earning quality and delay in reporting.

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References

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Empirical Research in Accounting
Volume 7, Issue 3 - Serial Number 25
November 2017
Pages 101-120

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History

  • Receive Date: 25 May 2015
  • Revise Date: 28 October 2017
  • Accept Date: 17 October 2017

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