KMAN Publication Inc. (KMANPUB) International Journal of Innovation Management and Organizational Behavior (IJIMOB) 3041-8992 3 Serial Number 13 (Special Issue on Finance and Economics) 2023 12 20 Economic Linkage and the Contagion Effect of Earnings Quality on Market Risk Economic Linkage and the Contagion Effect of Earnings Quality on Market Risk 93 101 10.61838/kman.ijimob.3.5.12 EN Journal Article <p><strong>Objective:</strong> This study investigates the economic linkage and contagion effect of earnings quality on market risk at the Tehran Stock Exchange over the years 2010 to 2019, focusing on a screened statistical population consisting of 650 (year-company) data points. Given the concept of information transfer and previous studies related to earnings quality, it is hypothesized that higher earnings quality among industry peers (comprising a subset of closely related companies based on industry classification at the stock exchange) reduces a company's systematic risk.</p> <p><strong>Methodology:</strong> This research employs three different metrics for measuring earnings quality and uses multivariate regression for hypothesis testing and model estimation.</p> <p><strong>Findings:</strong> The results indicate that the estimated coefficients for earnings quality of the company (-0.011825) and related companies (-0.025110) are inversely related.</p> <p><strong>Conclusion:</strong> The results suggest that higher earnings quality among economically linked companies leads to a reduction in a company's systematic risk.</p> https://journals.kmanpub.com/index.php/ijimob/article/download/2342/3118