A survey on relationship between reported condition note in audit report and stock returns of firms in Tehran Stock Exchange

Dividend yield plays an important role for decision-making in the stock market. Stock returns alone are informational content used by investors in financial analysis and forecasting. The purpose of the current study is to evaluate the effect of different types of notes and conditions on the performance audit report on the Tehran Stock Exchange over the period 2005-2011 for 65 selected firms. We have used statistical tests to examine the effects of disagreement, restriction and ambiguity issued by auditors. The results show that there is no relationship between stock returns and audit reports provided and capital market does not respond to the audit report. This could be due to unfamiliarity with the terminology of the users of the audit report to be audited.