The readability effect of financial statements on stock price risk and shareholder behavior

The present study seeks to explain the effect of readability of financial statements on stock price risk and shareholder behavior. Readability of financial statements is expected to reduce the risk of falling stock prices, which can have a positive effect on shareholder behavior.

The statistical population of the present study is Tehran Stock Exchange. The required data has been extracted from Rahavard Novin database, the site of the Exchange Organization and the site of the Codal. Based on the screening, 89 units were selected and studied during the period 1390 to 1397.

The results show that there is a significant relationship between the readability of financial statements with the risk of falling stock prices and shareholder behavior. But the results of testing the third hypothesis showed that readability does not have a significant effect on the relationship between stock price volatility risk and shareholder behavior.

The results of this study suggest that the readability of financial statements affects the behavior of shareholders and this can affect the liquidity of stocks.

Contribution: 

This study can provide a basis for replacing specialized terms in financial statements to eliminate the complexity of words and increase the comprehensibility of financial statements to reduce the risk of stock price falls and improve decision Involve audiences in financial statements.