Investigating the Quality of Risk Disclosure of Management Commentary and Financial Performance of the Company on the Investors’ Judgments

Disclosure of risk information plays an important role in the decision making process and the assessment of companies. The accounting standard-setters provide disclosure risk information of the company in the form of management commentary. The purpose of present study is to investigate the effect the quality of risk disclosure of management commentary and financial performance of the company on the investors' decision making. To test the research hypotheses, a scenario-based questionnaire has been used. The domain of research in 2018, the statistical population consists of all active financial analysts in Tehran Stock Exchange (TSE) and the research sample consists of 160 financial analysts. The results of the study showed that, when deciding on investing in a company with incremental financial performance, the higher quality risk of disclosure of the firm affects the willingness of financial analysts to investment in the company. Also, the results of the research indicate that when deciding on the earnings persistence of company's with incremental financial performance, the quality of company's risk disclosure high does not affect the financial analysts' judgment of continuing financial performance.