The Effect of Financial Statement Comparability on Idiosyncratic Return Volatility Considering the Moderating Role of Earnings Forecast Errors

Comparability in the capital market and debt is very important for investors and creditors, because investment and debt decisions are based on evaluating alternative opportunities or projects, and without this comparable information, it is not possible to make optimal decisions. The aim of this study was to investigate the effect of comparing financial statements on idiosyncratic return volatility taking into account the moderating role of Earnings forecasting errors. Using Samandmand's elimination method, a sample of 105 companies was selected from the companies listed on the Tehran Stock Exchange during the years 2012 to 2018. To test the hypotheses, multivariate regression models were used by combined data method. The results of the research show that the ability to compare financial statements has the opposite effect on idiosyncratic return volatility. The results of the study also show that Earnings forecasting errors have the opposite effect of comparing the financial statements on the idiosyncratic return volatility.