Studying the Mediating Effect of Earning Predictability on the Relationship Between Product Market Competition and Stock Returns

Competition in the product market with the effect on the Earning Predictability (as one of the quality of earning criteria), causes the accounting information to be relevant and improves the needed information of investors for economic decision making an it changes the expectations of investors and is valued by them which finally changes the stock returns of firms. So the main purpose of the study is to mediating effect of earning predictability on the relationship between product market competition and Stock returns in listed companies at tehran stock exchange. So 76 listed companies at Tehran stock exchange in the period from 2011 to 2015 were selected purposefully and Their data have been analyzed using hybrid analysis. In this study, the Herfindahl-Hirschman index was used to measure the competition in the product market and to estimate the Forecasting power of earnings, Volari and Jenkins [44] model have been used. Findings of the research show that there is a positive and significant relationship between product market competition and Earning Predictability. Also, Earning Predictability has a Mediatingeffect on the relationship between product market competition and stock returns.