Management Forecast, Idiosyncratic Risk, and Information Environment: Evidence of Listed Companies in ‎Tehran Stock Exchange (TSE)‎

Capital market plays an important role in attracting and circulating market liquidity and directing it to efficient economic sectors. Management forecast is one of the most important sources of information in the stock market, while its misrepresentation leads to more idiosyncratic risks and consequently inappropriate investment decisions by investors. In this study, management forecast errors were considered as a proxy for disclosure quality to investigate the relationship between information disclosure quality and idiosyncratic risk, as well as the effects of Information environment on these two variables in Tehran Stock Exchange (TSE). To this goal, a sample of 160 listed firms in TSE was examined from 2009 to 2017. The results indicated that the management forecast errors were positively related to idiosyncratic risks, while they were less positively related in a good information environment.