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Cash Flow, Earning Opacity and its Impact on Stock Price Crash Risk in Tehran Stock Exchange

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Author Info

  • Hossein Jabbari

    ()
    (Islamic Azad University of Kashan)

  • Zeinolabedin Sadeghi

    ()
    (Shahid Bahonar University of Kerman)

  • Seyed Ali Askari

    ()
    (Islamic Azad University)

Registered author(s):

    Abstract

    This study examined the role of operating cash flow and its ability in predicting and reducing stock price crash risk. The aim of this study was to investigate efficacy of operating cash flow on predicting and detecting stock price crash risk and also investigating role of operating cash flow on earning opacity in companies. The research methodology was of survey-explorative correlation type and the data were gathered using library method. The statistical population included companies accepted in Tehran Stock Exchange during 2006 to 2010, from which the sample was selected. Also, regression and correlation coefficients were used to examine correlation degree and relationship direction of the variables. The research results indicated a significantly inverse relationship between operating cash flow and stock price crash risk. Moreover, a significantly inverse relationship existed between operating cash flow and earning opacity; i.e. the higher the operating cash flow, the lower the earning opacity.

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    Bibliographic Info

    Article provided by Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences in its journal International Journal of Academic Research in Accounting, Finance and Management Sciences.

    Volume (Year): 3 (2013)
    Issue (Month): 4 (October)
    Pages: 138-145

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    Handle: RePEc:hur:ijaraf:v:3:y:2013:i:4:p:138-145

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    Web page: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal

    Related research

    Keywords: Cash flow; earning opacity; stock price crash risk; Tehran Stock Exchange;

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    Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
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    1. Bhattacharya, Utpal & Daouk, Hazem & Welker, Michael, 2003. "The World Price of Earnings Opacity," Working Papers 127185, Cornell University, Department of Applied Economics and Management.
    2. Hutton, Amy P. & Marcus, Alan J. & Tehranian, Hassan, 2009. "Opaque financial reports, R2, and crash risk," Journal of Financial Economics, Elsevier, vol. 94(1), pages 67-86, October.
    3. Jin, Li & Myers, Stewart C., 2006. "R2 around the world: New theory and new tests," Journal of Financial Economics, Elsevier, vol. 79(2), pages 257-292, February.
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