The Effects of Information Symmetry on the Relationship between Internal Information Quality and Systematic Risk Using Static and Dynamic Approaches

Agency problems and managers' appetite for profit management have made Information symmetry a major challenge for investors. Investors consider the systematic risk of companies to allocate their financial resources optimally. Information environment improvement by affecting the quality of internal information is expected to reduce firms' systematic risk. So, the present study has been designed and implemented for investigating the effect of information symmetry on the relationship between internal information quality and systematic risk. The research method, in terms of purpose, is applied research, and in terms of implementation, is descriptive-correlation with post-event data. Also, to measure systematic risk,  coefficient is used. Management error is used for forecasting net income, operating income, and sales to estimate internal information quality. The information symmetry of the company has also been measured by the reversed stock price fluctuations. To test hypotheses, using a systematic elimination method yield 65 companies listed in the Tehran Stock Exchange. Data were tested by regression method using static and dynamic approaches. The time-domain for data extraction is from 2010 to 2019, and data testing is from 2012 to 2019. Results indicate that information symmetry affects the relationship between the quality of internal information and firms' systematic risk. Also, it is suggested that, by implementing the requirements of internal controls and sufficient disclosure of information, companies will take an effective step in improving the corporate information environment.