Abstract:
This research aims to investigate the effect of conservative reporting on the investors'
opinion divergence at the time of earnings announcement in a 5 year period
during 2012-2016; the required data have been collected from Tehran Securities
and Stock Exchange Organization and the population is consisted of 585 corporates-
years which have been selected by the systematic removal sampling. To
investigate the research hypotheses, linear regression and correlation were used
and to analyze data and test the hypotheses, Eviews software has been utilized. In
conclusion, it can be pointed out that the conservative measures are negatively
related to the proxies of investors' opinion divergence at the time of earnings
announcement and the relationship is stronger when the corporate reports bad
news; also, conservation information content is stronger when the market is
shocked by an announcement.
Machine summary:
To investigate H1, the conservative impact on proxies of investors' opinion divergence has been first estimated as a regression model as follows: (View the image of this page) to investigate the relationship between conditional conservatism and proxies of investors' opinion divergence when the corporate reports bad news, the model (2) is used according to the coef- ficient of determination estimated for two models: (View the image of this page) To investigate H2, the model (3) is presented: (View the image of this page) Proxies of investors' opinion divergence in the corporate i in the period t, SUPRISEit: Abnormal return absolute value at the time of [1+,1-] around earnings announcements, Consit: Conditional conservatism of the corporate i in the period t, BADit: Artificial variable for bad news of the corporate i in the period t, UEit: Measurement index of unexpected announcements in the corporate i in the period t, SIZEit: Size of corporate i in the period t, MBit: Market-to-book value ratio of the corporate i in the period t, LEVit: Financial leverage of the corporate i in the period t and ��it: Model error In the following, how to measure the research variables will be discussed.
According to the regression results, it can be con- cluded that conservative measures are negatively related to proxies of investors' opinion divergence at the time of earnings announcements and the relationship is stronger when the corporate reports bad news and information content of conditional conservatism is stronger when the market is surprised with the announcements.