The Investigation of Relationship between Diversion Earnings Forecasts From Earnings Realized and Returns Stocks in Tehran Stock Exchange

Authors
abolfazl sadeghi batani 1
ali souri 2
ebrahim eltejaei 1
1 Institute for humanities and cultural studies
2 univercity of tehran
10.18869/acadpub.jemr.7.26.111
Abstract
The main purpose of this study, is to evaluate the effect of diversion earnings forecast and earnings realized on returns stocks in Tehran Stock Exchange. In fact, this research aims to examine the diversion of earnings resulting from the diversion of corporates managers forecasts earnings, what impact these diversion of earnings have on the returns of stock price. To achieve this, 194 companies listed in the Tehran Stock Exchange selected in the period of 2005-2013.

In this study, two groups of companies experienced the highest returns and lowest returns over the period studied, have been selected. Multi-factor model of Fama and French (1993) was used as the theoretical basis. The results indicate that forecasts of companies have experienced highest returns in comparison with lowest returns are more cautious and accurate than prediction of their future earnings. Changes in earnings realized and Tehran Stock Exchange index returns have positive and considerable relationship with stock returns as well, but these relationships for companies with highest returns are stronger than companies with lowest returns.
Keywords
Returns Stocks
Tehran Stock Exchange Index Returns
Earnings Forecasts
Earnings Realized
Capital Asset Pricing Model (CAPM)
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