Investigating The adjusting Role Of Accounting Comparability In Pricing - accounting Information Environment Issues

Abstract

The main purpose of this study is to investigate the role of accounting comparability as an intra-organizational factor on pricing considerations of information environment issues such as information uncertainty and information asymmetry. In this study, two criteria have been used to measure information uncertainty. Based on the standard deviation of cash flows by the matched company (MF) method, the first criterion of information uncertainty on the model presented by Larson and Risatek is based. To measure the second criterion three different indicators were used, and then factor analysis method was used to convert these indicators into a single criterion. Information asymmetry is also measured based on the two indicators of accruals quality and sales gap. Also, the expected return of shareholders has been calculated based on the 5-factor model of Fama and French, for pricing these issues. For this purpose, data related to companies listed on the Tehran Stock Exchange have been extracted, for the period 1388 to 1397 and a combined regression model has been used to test the research hypotheses. The results show that the comparability of profits and cash flows leads to changes in returns due to information uncertainty and information asymmetry.Thus, investors and users of financial information in the Iranian capital market as well as standard formulators should pay special attention to the importance of comparability of financial reports as a qualitative factor among organizations; this is because it reduces the effects of information environment interference on the decision-making of users of financial information.

Keywords

• information environment
• comparability of accounting
• information asymmetry
• information uncertainty
• pricing