Economic Links and the Effect of Earnings Quality on Market Risk

In this paper, effect of economic related firms’ earnings quality on market risk has been reviewed, In Tehran Stock Exchange during the years 2013 to 2017 and a sample of 170 companies. According to the concept of information transfers and previous experimental studies related to earnings quality, it is expected that the higher earnings quality of related economic companies, reduces company systematic risk. Therefore by using sets of economically related firms. This study provides convincing evidence to confirm the impact earnings quality of economically related firms on market risk, provides economically related firms on market risk, which is a confirmation of the information transfers in the Tehran Stock Exchange and provides evidence of the adverse effects of the quality of financial information. Specifically, the results show that in addition to the earnings quality of the company, earnings quality to economically related firms which are part of an industrial groups, also reduces extra burden of company returns in market factor. Three different criteria were used to measure earnings quality that yielded similar results.