The role of earnings management and dividend announcement in explanation of information asymmetry: Evidence from Tehran Stock Exchange

Abstract

This study examines the relationship between earnings management and information asymmetry based on some companies listed in Tehran Stock Exchange over the period of 2005-2010. The study only uses qualified samples by taking into account all limitations and necessary criteria. Based on the results of this survey, we can conclude that there is not a significant relationship between earning management and information asymmetry in Tehran Stock Exchange. There is also not a significant relationship between low or high earning management and information asymmetry. Estimated dividend announcement has information content and it can influence on information asymmetry. Finally, in Tehran Stock Exchange, there is information asymmetry and after dividend announcement, its value is more than before.

Keywords

• Earning management
• Dividend announcement
• Information asymmetry