The effect of economic policy uncertainty using financial risk and economic risk criteria on stock crash risk

Document Type : Original Article

Authors

1 Associate Professor of Accounting, Azad University, South Tehran Branch

2 دانشگاه آزاد تهران جنوب

3 Islamic Azad University, South Tehran Branch

10.22034/iaas.2021.145158

Abstract

Objective: Recent studies show that economic policy uncertainty has affected economic and financial variables in the United States and European countries. These uncertain conditions can have potential negative effects on financial markets and falling stock prices. Therefore, the purpose of this study is to investigate the effect of economic policy uncertainty using the criteria of financial risk and economic risk on stock crash risk in the stock market of Iran.
Methods: In this research, the information of 118 listed companies has been used and also to test the research hypotheses, multiple linear regression model has been used and due to the type of data studied, ARDL method has been used
Results: The results at 95% confidence level show that economic risk and financial risk in the short and long term have positive effects on stock risk and with increasing risks, the risk of stock fall increases.
Conclusion: This study helps market players to better understand and evaluate the impact of economic policy uncertainty on financial markets by empirically examining the effect of economic policy uncertainty on stock market risk of falling. This evidence has practical implications for both investors and legislators. By understanding the impact of economic policy uncertainty on stock crash risk, investors can adjust their investments, and legislators can improve investment environments by reducing economic policy uncertainty. Forgive.    

Keywords

Accounting and Auditing Studies
Volume 10, Issue 40
January 2022
Pages 47-62

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