Investigating the Effect of Financial Risk Reporting on Stock Returns with the Moderating Role of Competition in the Product Market (مقاله پژوهشی دانشگاه آزاد)

چکیده

Objectives: This study investigates the effect of financial risk reporting on stock returns, with a focus on the moderating role of product market competition among firms listed on the Tehran Stock Exchange. It aims to demonstrate how competitive pressure can enhance voluntary disclosure and improve investor confidence in financial information. Methodology/Design/Approach: The research employs a causal-correlational design. A sample of 120 firms was selected from listed firms using the systematic elimination method. The study covers the period from 2015 to 2019. Financial risk reporting was assessed through content analysis of annual reports, while product market competition was measured using industry-based concentration ratios. Hypotheses were tested using multivariate regression models. Findings: The findings indicate that product market competition significantly increases the extent of financial risk disclosure. Furthermore, financial risk reporting has a significant positive effect on stock returns. Importantly, product market competition also moderates the relationship between financial risk reporting and stock returns, strengthening the impact of disclosure on market performance. Innovation: This study contributes to the literature on voluntary disclosure by highlighting the strategic role of product market competition in shaping firms’ disclosure behavior and its implications for stock returns. It provides empirical evidence from an emerging market context, emphasizing the value of transparency under competitive pressure.