The Impact of Risk Management on Stock Price Shocks and the Moderating Role of Audit Quality

Articles in Press

Document Type : Research Paper

Authors

1 Department of Accounting, Faculty of Economics and Administrative Science, University of Qom, Qom, Iran

2 Assistant Professor, Faculty of Management and Accounting, Tolouemehr University, Qom, Iran

3 MSc., Faculty of Management and Accounting, Tolouemehr University, Qom, Iran

Abstract

The purpose of this study is to examine the effect of risk management on stock price shocks and, subsequently, to investigate the moderating role of audit quality in the relationship between risk management and stock price shocks. To achieve the objectives of this study, financial data from 130 firms listed on the Tehran Stock Exchange were collected over the period from 2016 to 2023. The data were analyzed using multivariate regression methods. The results showed that variable coefficient of risk management is negative and significant when the dependent variable is the size of permanent shocks and the size of temporary shocks and when the dependent variable is the number of permanent shocks and the number of temporary shocks, the variable coefficient of risk management is not significant. Therefore, risk management has a negative and significant effect on the magnitude of stock price shocks (shock intensity). Moreover, examining the moderating effect of audit quality on the relationship between risk management and stock price shocks shows that audit quality does not have a significant effect on strengthening or weakening the relationship between risk management and the number of stock price shocks, but it contributes to reducing the magnitude of stock price shocks (shock intensity). The effect of risk management on stock price shocks, as well as the effect of audit quality on this relationship, has not been examined in prior studies. Therefore, this research can play an effective role in enhancing firms’ capabilities and increasing market transparency.

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Journal of Asset Management and Financing

Articles in Press, Accepted Manuscript
Available Online from 09 June 2026

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