The Role of Strategic Management in Capital Markets in Relation to Income Statement Vahid Bekhradinasab

Document Type : Original Article

Author

PhD in accounting, department of accounting, Islamic azad university, najaf abad branch, Isfahan, Iran

Abstract

Compared to previous decades, the information contents of financial statements have increased significantly over the past decade. The main component of this rise is the disclosure of strategic management in the capital market. Accordingly, this research is aimed at investigating the role of strategic management in the capital market regarding markets' reaction to income statement. Business management strategies were studied from two dimensions: pricing leadership strategy and differentiation strategy and market reaction to income statement using two criteria of accumulated stock return to income statement and reaction of cumulative trading volume to income statement. The statistical population of the study includes all companies listed on Tehran Stock Exchange. The time slot of conducting this research was from 2009 to 2016, and the purposive sampling method included 149 companies. The research was based on multivariate regression using ordinary minimum squares model and combined data. The results indicated that management cannot change the reaction of stock accumulated returns to income statement by resorting to price leadership and differentiation strategy. However, management is able to change the company's trading volume by adopting business strategies. Moreover, management increases the volume of transactions by adopting a price leadership strategy, and reduces the volume of transactions by adopting a differentiation strategy. As a result, it is recommended that companies use a pricing leadership strategy to increase trading volume because adopting a price leadership strategy draws the attention of the capital market towards the company. This study helps companies to raise the level of market knowledge and strategic management theory. The results also showed that the reaction of the capital market to the income statement will be predictable through the adoption of pricing and differentiation leadership strategies. Accordingly, the researcher suggest that transparency and increasing financial and economic intelligence of companies by the Securities Exchange Organization be enhanced for the fulfillment of recommendations for the country's financial and economic system, especially the capital market, which plays an important role in macroeconomics and to disclose detailed information of the business strategies of the companies in the Codal website and other indexes, for attracting present and potential investors and shareholders.

Keywords

References

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Budget and Finance Strategic Research
Volume 1, Issue 2 - Serial Number 2
Summer Quarterly
August 2020
Pages 132-166

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History

  • Receive Date: 04 January 2020
  • Revise Date: 06 April 2020
  • Accept Date: 07 April 2020

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