Studying the effect of risk management on stock returns of companies listed in Tehran Stock Exchange

Abstract

This study examines the relationship between risk management and stock returns of companies listed in Tehran Stock Exchange. To do this, 73 companies during the period of 2005 to 2010 were selected. The effects of different variables on risk management including working capital, current assets, and current liabilities (independent variables) on stock returns (the dependent variable) of companies were studied. The purpose of it is to know the following issues:

1. Studying the relationship between current assets changes and stock return changes

2. Studying the relationship between current liabilities changes and stock return changes

3. Studying the relationship between working capital changes and stock return changes

4. Studying the relationship between risk management approach and stock return changes.

For the analysis, the Pearson correlation and regression are used. Also, by the use of security exchange site and Tadbir Pardaz Software, the raw data of companies were directly gathered from Tehran Stock Exchange and financial statements of companies, and EXCEL and SPSS Softwares were used for data analysis. The results demonstrate that there is no significant relationship between any of the risk management variables and stock returns of companies in Tehran Stock Exchange during the years 2005 to 2010.