Comparative Approach to Quarterly Earnings Informativeness and Information Asymmetry

Value of the earnings reporting process as one of the most important elements of decision making for the shareholders and also other capital market participants is contingent upon the amount of the information that this process makes available for the stock market. Elements such as information asymmetry and news in the company have impact on earnings reporting process and make changes to its earnings informativeness. The main objective of this study is to analyze the impact of information asymmetry and bad news on quarterly Earnings Informativeness of Tehran listed companies. In pursuance of this objective, data of 75 Tehran listed companies from 2010 to 2015 were used, and to gauge this correlation, panel fixed effects regression was applied. The results indicated that an increase in information asymmetry and bad news at the end of a quarter (but not the beginning of a quarter) has a positive and meaningful effect on the Earnings Informativeness of that quarter.