Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions
Objective: The purpose of this study is to examine the effects of political connections on stock price crash risk in 120 companies listed in the Tehran Stock Exchange in the period 2011-2016. Methods: To test the research hypotheses, a panel data model was used, and to measure the stock price crash...
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Shahid Bahonar University of Kerman
2019
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oai:doaj.org-article:0cdc0dee3afd4d7aa90e8caa74b267a82021-11-04T19:54:23ZImpacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions2008-89142476-292X10.22103/jak.2018.11872.2652https://doaj.org/article/0cdc0dee3afd4d7aa90e8caa74b267a82019-02-01T00:00:00Zhttps://jak.uk.ac.ir/article_2179_0cccd39d2df643331163c354b6e97fef.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XObjective: The purpose of this study is to examine the effects of political connections on stock price crash risk in 120 companies listed in the Tehran Stock Exchange in the period 2011-2016. Methods: To test the research hypotheses, a panel data model was used, and to measure the stock price crash risk, two indicators of negative conditional return skewness and down-to-up volatility of monthly returns were used. Results: The results showed that political connections have positive impacts on stock price crash risk. This is because the executives show a good image of the position of firms by hoarding bad news and/or hiding that. This behavior of managers in the long run will lead to stock price crash. The results also showed that the positive impact of political connections on stock price crash risk is more severe in the companies with high information asymmetries. Conclusion: Political companies are more inclined to make opportunistic use of events than the other companies. As a result, it is suggested to investors and users of financial statements to gain more knowledge about company's political relationships than the stock price in a business unit, because political action may be against the ultimate goal of the shareholders.Seyyed Ahmad Khalifeh Soltani (Ph.D)Maryam RahnamaFarzane KeymasiShahid Bahonar University of Kermanarticlepolitical connectionsstock price crash riskinformation asymmetryagency theoryAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 9, Iss 4, Pp 37-69 (2019) |
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DOAJ |
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political connections stock price crash risk information asymmetry agency theory Accounting. Bookkeeping HF5601-5689 |
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political connections stock price crash risk information asymmetry agency theory Accounting. Bookkeeping HF5601-5689 Seyyed Ahmad Khalifeh Soltani (Ph.D) Maryam Rahnama Farzane Keymasi Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions |
| description |
Objective: The purpose of this study is to examine the effects of political connections on stock price crash risk in 120 companies listed in the Tehran Stock Exchange in the period 2011-2016. Methods: To test the research hypotheses, a panel data model was used, and to measure the stock price crash risk, two indicators of negative conditional return skewness and down-to-up volatility of monthly returns were used. Results: The results showed that political connections have positive impacts on stock price crash risk. This is because the executives show a good image of the position of firms by hoarding bad news and/or hiding that. This behavior of managers in the long run will lead to stock price crash. The results also showed that the positive impact of political connections on stock price crash risk is more severe in the companies with high information asymmetries. Conclusion: Political companies are more inclined to make opportunistic use of events than the other companies. As a result, it is suggested to investors and users of financial statements to gain more knowledge about company's political relationships than the stock price in a business unit, because political action may be against the ultimate goal of the shareholders. |
| format |
article |
| author |
Seyyed Ahmad Khalifeh Soltani (Ph.D) Maryam Rahnama Farzane Keymasi |
| author_facet |
Seyyed Ahmad Khalifeh Soltani (Ph.D) Maryam Rahnama Farzane Keymasi |
| author_sort |
Seyyed Ahmad Khalifeh Soltani (Ph.D) |
| title |
Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions |
| title_short |
Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions |
| title_full |
Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions |
| title_fullStr |
Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions |
| title_full_unstemmed |
Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions |
| title_sort |
impacts of political connections on stock price crash risk under information asymmetry conditions |
| publisher |
Shahid Bahonar University of Kerman |
| publishDate |
2019 |
| url |
https://doaj.org/article/0cdc0dee3afd4d7aa90e8caa74b267a8 |
| work_keys_str_mv |
AT seyyedahmadkhalifehsoltaniphd impactsofpoliticalconnectionsonstockpricecrashriskunderinformationasymmetryconditions AT maryamrahnama impactsofpoliticalconnectionsonstockpricecrashriskunderinformationasymmetryconditions AT farzanekeymasi impactsofpoliticalconnectionsonstockpricecrashriskunderinformationasymmetryconditions |
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