The Survey of the Relationship between Management Expected Profits and Disclosure Quality Associated with Market Surprise

In the present study, we deal with the survey of the relationship between the management forecasted profits and disclosure quality with the market surprise in Tehran's securities market. Since managers, analysts and investors pay a greater attention to the companies' reported profit in a way that they use it to evaluate the company's performance and also because the decision-making for purchasing, maintain, or the sale of the stock shares is of a great importance for the investors, and from among other evidences and information, the capability to forecast the stock return rate has a greater influence on such decision-making, the aim of the present study is the survey of the relationship between the management forecasted profits and the disclosure quality with market surprise in the companies accepted in Tehran's Securities Exchange.To reach the aforementioned objective three hypotheses are being proposed in which it has been dealt with the profit forecast accuracy, getting surprised with the management announced profit and systematic risk with stock price response. To test the study hypotheses, the data from 116 companies accepted in Tehran's Securities Exchange was selected based on the goal-oriented systematic sampling method and the data from the time span from 2001 to 2011 was used to statistically test the hypotheses in the form of multiple-regression and the data panel was used in two softwares, namely SPSS17 and Eviews7.The obtained results are suggestive of a significant and reverse relationship between the profit forecast accuracy and the stock price response and there is a direct relationship between getting surprised from the management announced profit and the systematic risk with stock price response.