The effect of delay in profit recognition on the relationship between profits and returns of companies listed on the Tehran Stock Exchange

Full, timely and quality disclosure of financial information leads to increased transparency of this information and reduces information asymmetry. On the other hand, disclosure of financial statements can reduce unrealistic returns. Among this information published by companies, profit is of great importance and is of interest to many users. Based on this argument, the purpose of this study is to investigate the effect of delay in recognizing earnings on the relationship between earnings and stock returns. The statistical sample consists of 96 companies listed on the Tehran Stock Exchange during the period 20111 to 2016. The results of testing the research hypotheses using multivariate linear regression indicate that there is a significant relationship between accounting profits and stock returns of companies. Also, the obtained results indicate the relationship between future accounting profits and the stock returns of companies at a time when the recognition of profits in the financial statements is delayed relative to the market.