Experimental test of the effect of uncertainty in external information environment due to stock return volatility on the relationship between cost-income matching and stock price concurrency
Quarterly Journal of Securities Exchange

Quarterly Journal of Securities Exchange

Experimental test of the effect of uncertainty in external information environment due to stock return volatility on the relationship between cost-income matching and stock price concurrency

Document Type : Original Article

Authors
Amir Mozafarnezhad 1
Sina Kheradyar 2
Mansoor Soufi 3
Mehdi Fadaei Eshkiki 4
1 Ph.D. Student, Department of Industrial Management, Financial Trends, Rasht Branch, Islamic Azad University, Rasht, Iran
2 Assistant Professor, Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran.
3 Assistant Professor, Department of Industrial Management, Rasht Branch, Islamic Azad University, Rasht, Iran
4 Assistant professor, Industrial management group, Rasht unit, Islamic Azad University, Rasht, Iran
10.22034/jse.2020.11479.1625
Abstract
Environmental uncertainty exposes the company to an unpredictable environment and causes many fluctuations in the performance of companies. The purpose of this study is to investigate the effect of uncertainty in the external information environment due to fluctuations in stock returns on the relationship between the principle of conformity and stock price synchronicity. The research sample includes 158 companies listed on the Tehran Stock Exchange, which includes a period of 5 years from the beginning of 2014 to the end of 2018 in two groups of companies with high and low degree of compliance. The results show that in the group of companies with a high degree of compliance, uncertainty in the external information environment due to fluctuations in stock returns reduces the synchronization of stock prices. Also in the group of companies with a low degree of compliance, uncertainty in the external information environment due to fluctuations in stock returns increases the synchronization of stock prices. In general, it can be concluded that by observing the principle of compliance as much as possible, the amount of information uncertainty decreases. With the improvement of the information environment, the ability of stock prices to reflect more company-specific information increases, and if investors have easy and cheap access to company-specific information, they will be content with company-specific information more than industry / market information. Provides a reduction in stock price concurrency.
Keywords
Stock price synchronicity
the compliance principle
uncertainty in the information environment
fluctuations in stock returns
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Quarterly Journal of Securities Exchange
Volume 15, Issue 57
Spring 2022
Pages 255-274