Market Reaction

It is necessary for decision-makers to have a rating system in the banking industry in order to reflect the banks' status and performance. Although most institutions across the countries have rating banks and financial institutions, there is a lack of a comprehensive rating system across Iranian banks. Rating requires identifying the appropriate criteria according to the environmental and macroeconomic conditions. For this purpose, 35 components are determined through the opinion of 34 banking and academic experts using the Delphi method and rating is done by the TOPSIS method for 15 banks listed on the Tehran stock exchange over the period of 5 years from 2015 to 2019. The results show that in addition to the quantitative aspects, the qualitative aspects and aspects related to environmental and macro aspects are effective in the native model of banks ratings. Also, there is a positive and significant relationship between banks stock prices variation and the suggested ratings. The obtained results showed that there is a positive and significant correlation between the comprehensive model and early warning system so that the bank's position can be relatively described in the early warning system by identifying it within the model. This evidence addresses the need for a comprehensive consideration of proposed indicators to evaluate and rate banks.

In this research, we have tried to investigate the effect of successive news of dis-tributed profits, negative adjustment and late announcement of an adjustment on the market reaction process in Iran. Following the design of the market response evaluation indicators, the transaction information was collected from the Stock Exchange in the five-year period of 2011-2015. The statistical sample consists of 125 companies selected by systematic elimination method and a total of 625 years-firms. To investigate the research hypotheses, linear regression and correlation have been used and for analyzing the data and testing the hypotheses, Eviews software has been used. What is summarized in the overall conclusion of the test of research hypotheses is that the successive news of distributed profits has an effect on the market reaction process;moreover, negative adjustment has a negative impact in the forecast of earnings per share and late announcement of the adjustment of the earnings per share on the market reaction process.Finally, the results indicated that the market's negative reaction to the late negative adjustment of the earnings per share forecasting is not lower than timely negative adjustment of earnings per share forecasting, and the positive reaction of the market to adjust the timely positive or zero forecast of earning per share, compared to adjusting the late positive or zero forecast of earnings per share is also no greater. the results obtained in this study are partly consistent with the documentation referenced in the theoretical framework of the research and financial literature

In the behavioral finance paradigm, investor sentiment can affect managers' behavior in financial reporting. Therefore, this study examines the relationship between investor sentiment and the likelihood of fraudulent financial reporting. Additionally, as risk disclosure may influence the relationship between investor sentiment and the likelihood of fraud, this paper investigates its moderating role. For this purpose, the data of 41 companies operating in the petroleum and petrochemical industries in Tehran Stock Exchange during the years 2013 to 2021 were used. The research models have been examined by logistic regression method. The results show that the likelihood of fraud is lower when investor sentiment is high. Furthermore, the study of the market's reaction to fraud shows that the market reaction to fraud announcements is less negative during high investor sentiment periods. In addition, the results demonstrated that risk disclosure moderates the relationship between investor sentiment and the likelihood of fraudulent financial reporting. It may be because, risk disclosure reduces the impact of investor sentiment on auditors' optimism by reducing information asymmetry between managers and investors. This leads to an increase in audit report clauses that confirm likelihood of fraudulent financial reporting.