Investigating of Economic Policy Uncertainty on Information Asymmetry, Investors’ Reaction To Earnings Surprises and Management Disclosures

The purpose of this study is to investigate the effect of economic policy uncertainty, information asymmetry, and investor reaction on surprise earnings and voluntary disclosure.

The study is a descriptive, correlational and post-event research that was conducted in 138 companies listed on the Tehran Stock Exchange during the period 2009-2018. The variables were extracted from the website of the Statistics Center and the Economic and Financial Database of the Ministry of Economy, as well as the new revenue software and the report of the Board of Directors, and analyzed by multiple regression method.

The study showed that economic policy uncertainty has a positive and significant effect on the asymmetry of investor information. In addition, economic policy uncertainty has a negative and significant effect on voluntary disclosure. There was also no credible evidence that economic policy uncertainty had a significant effect on the investor's response to earnings surprises.

The transient negative effect of economic policy uncertainty on voluntary disclosure of management reflects the opportunistic view of company managers that causes economic policy uncertainty to be used to achieve the personal interests of managers.

 In addition to developing the literature on economic policy uncertainty and the reaction of investors to surprise profits, this study also prompted financial and economic policymakers to seek to stabilize and create a safe investment environment, which one of the basic conditions is the economic development of the country.