Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions

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Khalifeh Soltani Seyyed Ahmad; Rahnama Maryam; Keimasi Farzaneh

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Journal Paper

Paper Information

Journal: JOURNAL OF ACCOUNTING KNOWLEDGE Year:2019 | Volume:9 | Issue:4 (35) Page(s): 37-69

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Title

Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions

Author(s)

Khalifeh Soltani Seyyed Ahmad | Rahnama Maryam | Keimasi Farzaneh | Issue Writer Certificate

Keywords

Political ConnectionsQ1

Stock Price Crash RiskQ1

Information AsymmetryQ2

Agency TheoryQ2

Abstract

Objective: The purpose of this study is to examine the effects of Political Connections on Stock Price Crash Risk in 120 companies listed in the Tehran Stock Exchange in the period 2011-2016. Methods: To test the research hypotheses, a panel data model was used, and to measure the Stock Price Crash Risk, two indicators of negative conditional return skewness and down-to-up volatility of monthly returns were used. Results: The results showed that Political Connections have positive impacts on Stock Price Crash Risk. This is because the executives show a good image of the position of firms by hoarding bad news and/or hiding that. This behavior of managers in the long run will lead to stock price crash. The results also showed that the positive impact of Political Connections on Stock Price Crash Risk is more severe in the companies with high information asymmetries. Conclusion: Political companies are more inclined to make opportunistic use of events than the other companies. As a result, it is suggested to investors and users of financial statements to gain more knowledge about company's political relationships than the stock price in a business unit, because political action may be against the ultimate goal of the shareholders.

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APA: Copy

Khalifeh Soltani, Seyyed Ahmad, Rahnama, Maryam, & Keimasi, Farzaneh. (2019). Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions. JOURNAL OF ACCOUNTING KNOWLEDGE, 9(4 (35) ), 37-69. SID. https://sid.ir/paper/163361/en

Vancouver: Copy

Khalifeh Soltani Seyyed Ahmad, Rahnama Maryam, Keimasi Farzaneh. Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions. JOURNAL OF ACCOUNTING KNOWLEDGE[Internet]. 2019;9(4 (35) ):37-69. Available from: https://sid.ir/paper/163361/en

IEEE: Copy

Seyyed Ahmad Khalifeh Soltani, Maryam Rahnama, and Farzaneh Keimasi, “Impacts of Political Connections on Stock Price Crash Risk under Information Asymmetry Conditions,” JOURNAL OF ACCOUNTING KNOWLEDGE, vol. 9, no. 4 (35) , pp. 37–69, 2019, [Online]. Available: https://sid.ir/paper/163361/en

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