The Impact of Management Earning Forecast on Non-systematic Risk

Abstract

This research explores the relationship between management earnings forecasts and firm’s non-systematic risk. This study has collected data from 76 firms listed on Tehran Stock Exchange from 2005 to 2012 and has tested the research hypotheses by utilizing the regression coefficient analysis. Many of the changes in risks of the corporates in the capital markets are influenced by various information that corporates are offering to the market. Some of these sources of information are estimations and forecasts. So verification of these predictions, and also reaction of investors to the issuance of these forecasts will be studied. Considering the reaction towards corporate's risks as a dependent variable to the presented earnings forecasts by managers, the research results indicate that there is a significant and negative relationship between the accuracy and frequency of earnings forecasts.

Keywords

• Management earnings forecasts
• Firm’s non-systematic risk
• Accuracy and frequency of earnings forecasts