Accounting Quality and Stock Price Delay

In frictionless capital market with complete information, stock prices adjust to new information instantaneously and completely. However, a substantial body of research studies information imperfections. Information imperfections potentially hinder timely price discovery and are associated with delayed stock price adjustment to information. Poor accounting quality is likely associated with uncertainty about stock valuation parameters and incomplete information which leads to delayed stock price adjustment. Existing research analyzes the effect of accounting quality on stock price delay in Tehran Stock Exchange. The study uses 61 listed companies in Tehran Stock Exchange data during the years 1387 to 1391 solar. The results suggest poor accounting quality is associated with less timely price adjustment.