the empirical test of the relationship between information asymmetry, overvalued equities and stock price crash risk

This study empirically examines the effect of equity overvaluation on future stock price crash risk in companies with greater information asymmetry. the study investigates whether overvalued firms are more susceptible to future crash risk by utilizing information asymmetry and crash risk indicators. the primary objective of this study is to explore the relationship between overvaluation and future stock price crash risk. as information asymmetry between a firm and the market increases, managers gain greater abilities and opportunities to withhold negative news while expediting the release of positive news. consequently, it is anticipated that the information asymmetry between managers and investors heightens future stock price crash risk. to achieve this, one main hypothesis and three subsidiary hypotheses are identified, and data from 111 listed companies on the tehran stock exchange from 2009 to 2017 are analyzed. a panel data approach is employed to test the research hypotheses. the findings reveal a positive and significant relationship between overvaluation and future stock price crash risk in companies operating in monopolistic markets, and this relationship is further intensified by information asymmetry.