The Relationship between Managerial talent, Investment Efficiency and Stock Price Crash Risk

The aim of the present study was to investigate the relationship between managerial talent¡ investment efficiency¡ and also¡ the management ability interaction and financial reporting quality with stock price crash risk. To this end¡ the data from 124 companies accepted on the Stock Exchange in Tehran were used for a span of five years (2009-2014). To measure managarial talnet¡ Demirchian & et al. (2012) model¡ which was based on accounting variables; Chen & et al. (2011) model¡ to measure investment efficiency; Kothari & et al. (2005) model¡ to measure financial reporting quality; Chen & et al. (2001) model¡ to measure stock price crash risk were used. To test the hypotheses¡ the multiple regression statistics was used. The results confirmed the theory of rent extraction and showed that firms with more talented managers making inefficient investment decisions. these firms¡ take opportunistic approach and manupulate financial reports in order to hid bad news to increase stock price crash risk.