Impact of Conservatism in Risk Disclosure on the Information Content of Accounting Information and Stock Return Synchronicity

In firms with conservative risk disclosure more validity is needed to disclose good risk news and a lower standard of validity is needed to disclose bad risk news. Conservatism in risk disclosure (CRD) can provide reliable information by imposing a higher threshold of verification capability and increase timeliness by faster disclosure of bad risk news. The result would improve the quality of management reports and increase the information content and transparency of accounting information. The purpose of this study is to investigate the effect of CRD on the information content of accounting information and stock return synchronicity. The research method is Ex-post facto and the statistical population of the research is the firms listed on the Tehran Stock Exchange and the number of samples studied includes 167 firms. The research period is from 2009 to 2018. Data are sorted in Excel software and statistical analysis is performed using E-views software. The research hypotheses are tested by panel data approach using kramer test and multiple linear regression. The findings show that CRD enhances the information content of accounting information. The results also show that CRD by increasing the transparency of firm-specific information reduces the stock return synchronicity.