Document Type : Research Paper

Authors

• Sarah Mohsin ¹
• Narges Hamidian ²
• seyed abbas hashemi ³

¹ Ph.D. Student of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

² Assistant Professor of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

³ Associate Professor of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran

Abstract

Stock price crash risk, defined as an adverse event, is a pervasive phenomenon at the market level. This implies that the decline in stock prices is not limited to a specific stock but extends across the entire market. Stock price crashes result in significant losses for shareholders and investors, as well as a decline in the overall capital market. Hence, understanding the factors influencing this phenomenon is of critical importance. The present study aims to investigate the impact of industry operating cash flow volatility on future stock price crash risk, considering the roles of economic policy uncertainty and conditional conservatism in companies listed on the Tehran Stock Exchange. A sample of 136 companies was selected using a screening method over the period from 2012 to 2022.To analyze the data and test the hypotheses, regression analysis and panel data techniques were employed. The findings indicate that industry operating cash flow volatility has a positive and significant effect on future stock price crash risk. Furthermore, economic policy uncertainty amplifies the positive effect of industry operating cash flow volatility on stock price crash risk. Conversely, conditional conservatism in accounting mitigates the positive relationship between operating cash flow volatility and future stock price crash risk.

Keywords

• Operating Cash Flow Volatility
• Stock Price Crash Risk
• Conditional Conservatism of Accounting
• Economic Policy Uncertainty

Main Subjects

• Financial Accounting