Investigating the relationship between risk of stock price falls, financial turmoil and stock returns on the Tehran Stock Exchange

Managers have a lot of incentive to hide the bad performance of undesirable projects and over-invest, which leads to falling stock prices. By increasing the risk of financial turmoil, business executives have a higher incentive to avoid spreading bad news effectively. Hide the poor performance of their companies. In general, the view is that the risk of financial turmoil for a company with the basic information it has about the company and market performance can be an early warning sign of impending stock returns problems. Financial turmoil has a significant effect on stock returns. The purpose of this study was to investigate the relationship between stock price fall risk, financial turmoil and stock returns in the Tehran Stock Exchange. The statistical population of this research is Tehran Stock Exchange companies; the statistical sample size was 127 companies. Data collection is done by two methods of library and financial reference. Eviews software was used to analyze the data. The results showed that there is a positive and significant relationship between financial turmoil and stock returns. Also, stock liquidity has played a positive adjusting role in the relationship between stock price risk and stock returns.