Studying effect of uncertainty on capital market reactions to income smoothingof companies listed on the Tehran stock exchange market

The main goal of current study is to investigate effect of uncertainty on capital market reactions to income smoothing of companies listed on the Tehran Stock Exchange Market. Period of 5 consecutive years is from 2007 to 2011. Reserche’s dependent variable iscapital market reactions which has been measured based onearnings response coefficients according to the model proposed by Collins et al. (1994). Fundamental independent variables consist of uncertainty condition and income smoothing. Due to Habib et al. (2011), uncertainty level based on net income fluctuations has been measured and to evaluate income smoothing, discretionary accruals have been used. In total, findings are showing that uncertainty has the negative effect on capital market reactions. In another word, investors and activators in capital market have paid attention to uncertainty in companies of statistic sample and have considered this information in investing decisions. Also, findings indicate that informational content of income smoothing has had positive effect oncapital market reactions under condition of uncertainty. Recent findings indicate this issue that managers’ attempts in order to decrease effects of uncertainty have appropriate consequences and probably lead to improve investors’ reaction to the published information of companies.

کلیدواژه ها:

Uncertainty ، Income smoothing ، Capital market reactions