The Effect of Environmental Performance on Stock Price Crash Risk with an Emphasis on Political Connections in Tehran Stock Exchange (TSE)

Investors and shareholders are two groups that have a special interest in the information on risk and returns. Thus, the effect of environmental performance on stock price crash risk is the most important information considered by users. The present study examined the impact of companies’ environmental performance on stock price crash risk with an emphasis on political connection in Tehran Stock Exchange (TSE). This study was an applied and descriptive-correlational research in terms of purpose and nature. To achieve the research goal, 109 companies were selected from among those listed on TSE during the years of 2011-19 via the systematic elimination sampling method and a total of 981 years of the companies was considered for analysis. To study the relationships between the variables, multivariate regression analysis was used to fit the logistic regression pattern. Also, the combined data method was utilized to test the hypotheses. The findings showed that environmental performance had a significantly negative effect on stock price crash risk, but political connections as a mediator variable had no effects on the relationship between environmental performance and stock price risk.