The Effect of Management Interpretative Report Regulations on the Simultaneous Relationship between the Company's Market Value and Risk Sentiment in Annual Reports Using the System of Simultaneous Equations

Document Type : Original Article

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Abstract

Risk sentiment affects the estimation of risk by investors and their decision making. This research reports the results of the experimental investigation of the risk sentiment of the annual reports of the companies admitted to the Tehran Stock Exchange, as well as the simultaneous relationship between the risk sentiment of the annual reports and the company's market value, along with the effect of compiling the management's interpretive report. In this regard, the aim of the upcoming research is investigation the two-way relationship between the risk sentiment of the annual reports and the market value of 130 companies listed to the Tehran Stock Exchange. For this purpose, the system of simultaneous equations was estimated using the two-stage regression method, and the risk sentiment of the annual reports was calculated using the content analysis method. After observing and testing the information of 1690 - the company in the time period of 2019-2018, the estimation results show the existence of a two-way relationship between the risk sentiment of annual reports and Q-tobin ratio in companies admitted to the Tehran Stock Exchange. Also, the relationship between the risk sentiment of annual reports and the price-to-earnings ratio and the equity market value ratio has a significant difference compared to the influence of the management's interpretive report.

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History

  • Receive Date: 29 September 2022
  • Revise Date: 13 March 2023
  • Accept Date: 11 March 2023

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