Investigating The Relationship Between Accounting Information And Market Risk

The human need for recording, storing, processing, and analyzing financial data has led to the emergence of accounting. Since accounting in the everyday life of humans is ongoing, environmental changes have affected it. These changes, which can be social, political, economic, and financial, have expanded the scope of accounting objectives. In other words, accounting objectives and methods have been adapted to changes in environmental conditions, and these objectives have been developed to meet information needs. Therefore, accounting plays a significant role in the economic system. Appropriate decision-making by individuals, companies, government, etc., will result in the proper distribution and efficiency of financial resources. Consequently, decision-makers should have reliable information. On the other hand, investing is an essential process in economic growth. The information derived from the accounting system helps investors assess the future performance of the company and its associated risk; therefore, such information is beneficial for valuing the company. The role of risk and return on investment, like the role of supply and demand in the economy for pricing commodities. From a theoretical point of view, risk means a potential and measurable loss of investment. By the 1950s, "risk" was considered a qualitative factor, but Harry Markowitz's research identified risk as a quantity factor. The effect of the risk of an investment on the total investment risk involves the calculation of "covariance" and "correlation coefficient", which requires complex computations and is also time-consuming. Subsequently, William Sharp introduced a simple and practical model by determining the beta risk factor as a risk measure. This research sought a meaningful relationship between accounting information and companies' stock risk. The statistical population of this research is the companies listed on the Tehran Stock Exchange. Eight years have been considered, and according to the established criteria, 38 companies have been analyzed as the final sample. Independent variables in this study are financial ratios. These ratios are net profit to equity, debt to equity, current assets to current debt, sales to equity, and aggregate assets. Financial ratios are independent variables in this study. These ratios are the ratio of net profit to equity, debt to equity, current assets to current debt, sales to equity, and aggregate assets. The dependent variable in this research is beta, which means systematic risk (market). The stock returns of the sample companies and market returns are used to calculate the beta coefficient. To determine the relationship between independent variables and dependent variables, regression and correlation tests have been used. In this research, the relationship between accounting information and the systematic risk of companies has been investigated. For this purpose, the statistical hypothesis is defined as follows: there is a meaningful relationship between accounting and beta data; following this study, it can be concluded that there is a meaningful relationship between accounting information and beta.