The effect of financial statement comparability ‎characteristic on future earnings response coefficient

Future Earnings Response Coefficient (FERC) which defines as the amount of ‎information of future earnings reflected in stock prices is one of the important tool ‎for assessing the stock price information and investors prediction capability. The ‎combination of industry-level earning and firm-specific earning information will be ‎reflected at Information of future earnings reflected in stock prices. Due to the ‎Earning Timing Hypothesis, the foreseeing of firm-specific earnings compared to the ‎industry-level earnings is more difficult as firm-specific acquisition is costly, and ‎industry-level earnings information are reflected into stock prices earlier than firm-‎specific earnings information. On the other hand, accessibility of firm-specific ‎information allows the efficient resource allocation. Earning Timing Hypothesis is ‎very associated with the stock price synchronicity which represents a condition in ‎which enough firm-specific information is not available and a firm's stock price has in ‎the same trend with the other firm's stock prices. Financial statement comparability is ‎one of the qualitative characteristics of accounting information that could increase ‎FERC. One of the most important factors for effective resource allocation is the ‎Financial statement comparability. The possibility of that depends on the qualitative ‎characteristic that makes investors to predict firm-specific earnings and accumulate ‎more amounts of firm-specific information, in that case the stock price synchronicity ‎will be reduced. According to this, the main purpose of this study is to determine the ‎effect of financial statement comparability characteristic on Future Earnings ‎Response Coefficient and stock price synchronicity. ‎ In order to achieve the aforesaid purpose, four hypotheses were developed and a ‎sample consisting of 30 firms was selected by judgmental‏ – ‏Nonprobability‏ ‏method ‎of the firms listed in Istanbul Stock Exchange during the years 2005 to 2015. To test ‎the hypotheses, multivariable regression model with panel data have also been used.‎ The results of computing research models show that financial statement ‎comparability, increases FERC considerably. Also, the results indicate that financial ‎statement comparability does not affect industry-level FERC considerably, while it ‎increases firm-specific FERC considerably. Furthermore, the negative and significant ‎effect of financial statement comparability on stock price synchronicity, confirms this ‎finding.‎