Voluntary Disclosure and Informational Content of Share Price: Evidence from Tehran Stock Exchange

Document Type : Research Paper


Faculty of Economic and Management, Urmia University, Urmia, Iran


The aim of this research was to determine the impact of voluntary information disclosure on informational content of share price. In this regard, future earnings response coefficient was used to determine the informational content of the share price about the future income information. Furthermore, share price synchronicity was used to evaluate the informational content of the share price about firm-specific information. To this end, it was attempted to select 98 firms listed in Tehran Stock Exchange (from 2005 to 2016). The analyses indicated that the voluntary information disclosure improved the informational content of share prices in terms of the future earnings. However, it was indicated that the voluntary information disclosure did not affect the informational content of share price in terms of firm-specific information. So, voluntary information disclosure increases the capability of the investors to predict the future income and, consequently, future income information will be reflected in the share price.


Main Subjects

Ahmadpour, A., & Peykarnegar Ghale Roodkhani, S. (2011). The relationship between components of accruals quality and price synchronicity in Tehran Stock Exchange companies. Quarterly Journal of Securities Exchange, 4(16), 137-151. (Persian)
Bashirimanesh, N., Rahmani, A., & Mosavi, M. (2016). Consequences of voluntary disclosure: Structural equation modeling approach. Journal of Empirical Research in Accounting, 5(4), 161-186. (Persian)
Bashirimanesh, N., Rahmani, A., Hosseini, S. A., & Mosavi, M. (2015). Value relevance of voluntary disclosure in capital market of Iran. Journal of Accounting and Auditing Review, 22(3), 279-300. (Persian)
Botosan, C. A.  (1997). Disclosure level and the cost of equity capital. The Accounting Review, 72(3), 323-349.
Cheng, C. S. A., Johnston, J., & Li, S. (2014). Higher ERC or higher future ERC from income smoothness? The role of information environment. American Accounting Association Annual Meeting and Conference on Teaching and Learning in Accounting, Atlanta, GA, August 2-6, 2014.
Cheng, C. S., Johnston, J. A., & Zhou, L. (2012). Earnings quality and price synchronicity: Industry-wide and firm-specific information. Available at http://ssrn.com.
Choi, J. H., Choi, S., Myers, L. A., & Ziebart, D. (2017). Financial statement comparability and the informativeness of share prices about future earnings. Available at: http://www.ssrn.com.
Choi, J. H., Myers, L. A., Zang, Y., & Ziebart, D. (2011). Do management EPS forecasts allow returns to reflect future earnings? Implications for the continuation of management’s quarterly earnings guidance. Review of Accounting Studies, 16(1), 143-182.
Collins, D. W., Kothari, S. P., Shanken, J., & Sloan, R. G. (1994). Lack of timeliness and noise as explanations for the low contemporaneous return-earnings association. Journal of Accounting & Economics, 18(3), 289-324.
Drake, M. S., Myers, N., Myers, L. A., & Stuart, M. D. (2015). Short sellers and the informativeness of share prices with respect to future earnings. Review of Accounting Studies, 20(2), 747-774.
Durnev, A., Morck, R., & Yeung, B. (2004). Value-enhancing capital budgeting and firm-specific share return variation. Journal of Finance, 59(1), 65-105.
Ebrahimi kordlar, A. & Javani Ghalandari, M. (2016). The effect of auditor expertise on earnings quality and share price synchronicity. Journal of Accounting and Auditing Review, 23(2), 137-154. (Persian)
Foruqi, D., & Qasemzad, P. (2015). The effect of financial statement comparability on future earnings response coefficients. Journal of Accounting and Auditing Review, 22(4), 479-500. (Persian)
Foruqi, D., & Qasemzad, P. (2016). The effect of financial statements comparability on share price synchronicity. Financial Accounting Researches, 8(1), 39-54. (Persian)
Gelb, D. S., & Zarowin, P. A. (2002). Corporate disclosure policy and the informativeness of share prices. Review of Accounting Studies, 7(1), 33-52.
Gul, F. A., Kim, J. B., & Qiu, A. A. (2010). Ownership concentration, foreign shareholding, audit quality, and share price synchronicity: Evidence from China. Journal of Financial Economics, 95(3), 425-442.
Haggard, K. S., Matrin, X., & Pereira, R. (2008). Does voluntary disclosure improve share price informativeness? Journal of Financial Management, (37), 747-768.
Hamrouni, A., & Solonandrasana, B. (2013). A study of the relationship between the extent of voluntary disclosure and information asymmetry in stock exchange market. Conference de 1’Association Fracaise de la Finance (AFFI), Lyon, France.
Haw, I. M., Hu, B., Lee, J. J., & Wu, H. (2012). Investor protection and price informativeness about future earnings: International evidence. Review of Accounting Studies, 17(2), 389-419.
Imani Barandagh, M., & Abdi, S. (2016). The impact of income smoothing on the future earnings response coefficient with the effect of moderating different information environments. Journal of Accounting and Auditing Review, 23(3), 289-310. (Persian)
Jin, L., & Myers, S. C. (2006). R2 around the world: New theory and new tests. Journal of Financial Economics, 79(2), 257-92.
Kamyabi, Y., & Parhizgar, B. (2016). The study of the relationship between institutional investors and share price synchronicity in listed companies in Tehran Stock Exchange. Journal of Investment knowledge, 5(17), 165-186. (Persian)
Kashanipoor, M., Rahmani, A., & Parchini Parchin, S. M. (2009). The relationship between voluntary disclosure and outside directors. Journal of Accounting and Auditing Review, 16(57), 85-100. (Persian)
Khajavi, S., & Alizadeh Tala Tappe, V. (2014). Investigating the impacts of voluntary disclosure level on the information asymmetry of the companies listed in Tehran Stock Exchange. Empirical Studies in Financial Accounting Quarterly, 11(42), 89-115. (Persian)
Li, D., Song, L., & Zhang, Z. (2014). Does the relationship between accounting disclosure and bank loan contracts vary with borrower characteristics? Evidence from emerging markets. Asian Journal of Finance & Accounting, 6(1), 440-463.
Lundholm, R., & Myers, L. A. (2002). Bringing the future forward: The effect of disclosure on the returns-earnings relation. Journal of Accounting Research, 40 (3), 809-839.
Mehrani, S., Karami, G. R., Seyyed Hosseini, M., & Jahroomi, M. (2016). Accounting theory (2nd Vol.). Tehran: Negahe Danesh Publications. (Persian)
Mehrvarz, F., & Marfou, M. (2016). The relationship between financial statements comparability with share price in formativeness about future earnings. Empirical Studies in Financial Accounting Quarterly, 13(49), 83-110. (Persian)
Morck, R., Yeung, B., & Yu, W. (2000). The information content of share markets: Why do emerging markets have synchronous share price movements. Journal of Financial Economies, 58 (1-2), 215-260.
Moumen, N., Othman, H. B., & Hussainey, K. (2015). The value relevance of risk disclosure in annual reports: Evidence from MENA emerging markets. Research in International Business and Finance, 34(3), 96-112.
Piotroski, J., & Roulstone, D. (2004). The influence of analysts, institutional investors and insiders on the incorporation of market, industry and firm-specific informatio into share prices. The Accounting Review, 79(4), 1119-1152.
Rahmani, A., Bashirimanesh, N., & Shahrokhi, S. S. (2012). Investigate effect of the release of earnings forecast on future earnings response coefficient. Journal of Accounting Knowledge, 3 (10), 29-50. (Persian)
Setayesh, M. H., & Shamseddini, K. (2016). An investigation of the relationship between investor sentiment and price shares in Tehran Stock Exchange (TSE). Journal of Accounting Advances, 8(1), 103-125. (Persian)
Setayesh, M. H., Roosta, M., & Alizadeh Tala Tappe, V. (2014). The relation between voluntary disclosure and performance of firms listed in Tehran Stock Exchange. Journal of Empirical Research in Accounting, 4(1), 153-168. (Persian)
Sila. V., Gonzalez., A., & Hagendor. J. (2017). Independent director reputation incentives and share price informativeness. Available at: http://www.ssrn.com.
Song, L. (2015). Accounting disclosure, share price synchronicity and share crash risk an emerging-market perspective. International Journal of Accounting & Information Management, 23(4), 349-363.
Tian, E. (2014). Voluntary disclosures and the share price chronicity evidence from New Zealand (Doctoral dissertation).  New Zealand, Auckland University of Technology.
Utz, S. (2016). Share synchronicity, share price crash risk, and corporate social responsibility: Evidence from an international sample. Available at: http://www.ssrn.com.
Wang, M. & Hussainey, K. (2013). Voluntary forward-looking statements driven by corporate governance and their value relevance. Journal of Accounting and Public Policy, 32(2), 26-49.
Wang. J. W., & YU., W. W. (2015). The information content of share prices, legal environments, and accounting standards: International evidence. European Accounting Review, 24(3), 471-493.