The Impact of Information Sources Combination on the Information Content of Annual Financial Reports

Combination of some information sources leads to increase in information content of financial and some others leads to decrease. Theoretically, as much as in dependence between financial statements variables at the execution time of information source is more, more information content is produced and more impact on return is expected. According to correlation between items of financial statements, the aim of this study was to investigate the impact of information content combination of items in financial statements. It is proposed that combination ratio of financial statements variables uncertainty has a negative relation with annual return, and companies with low combination ratio of uncertainty have higher annual returns. According to the constraint that firms must not be loss during the period, to test the hypotheses of this study, financial information of 1020 firm-year listed in Tehran Exchange from 2000 to 2017 was analyzed. According to correlation between variables of financial statements, Findings of the research imply that the impact of information content combination of financial statements in various industries on stock return is different.