The effect of political communication on the risk of falling stock prices, taking into account the moderating effect of institutional ownership

The fall in stock prices indicates the phenomenon that due to the sudden release of accumulated negative news of the economic unit; At the market level, stock prices fall sharply in a short time. Therefore, the management of negative news by the management is one of the main reasons for the risk of falling stock prices. Researchers argue that the political connections of shareholders and board members can affect management performance and, consequently, the risk of falling stock prices of economic units. On the other hand, some researchers suggest that institutional ownership as an effective monitoring mechanism can play a significant role in moderating the impact of political communication on the risk of falling stock prices. The purpose of this study is to investigate the effect of political relations on the risk of stock price falls by considering the moderating effect of institutional ownership. The statistical sample of the research includes 126 companies in the period 1390 to 1397. The statistical method used to test the hypotheses presented in this research is the combined data method. The research model was tested and analyzed using multiple regression statistical method. The results of the main hypothesis of the research show that political communication has a positive and significant effect on the risk of falling stock prices. Also, the results of the research sub-hypothesis showed; Institutional ownership does not have a significant effect on the severity of the effect of political communication on the risk of falling stock prices. In other words, institutional ownership, due to its short-term perspective on the profitability of economic units, cannot properly perform its regulatory function and have a moderating effect on the impact of political communication on the risk of falling stock prices.