The effect of information asymmetry on stock return predictability

Abstract

The aim of this research is to investigate the information content of operating income and cash flow operating with stock return in information asymmetry situations in the accepted companies at Tehran stock exchange. This study was done according to data obtained from 70 companies during 2006-2010.This is an after event research. This research is calcified as the applicable research. And the hypothesis was examined, using liner multiple regression. The results of the examination reveal that operating income and cash flow operating contain the information content and they can explain the stock return and on the other hand, information content of operating income and cash flow operating are different from each other and information content of operating income is higher than cash flow operating. Also, the results indicated that information asymmetry effects on the income information content and cash flow operating and whatever the information asymmetry is higher, then information content of cash flow operating is increased. © Maxwell Scientific Organization, 2013.