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Todays, information significant and necessity and its role in the decision macking procces, its obvious. Absoulotly, decision quality depends on information trustworthy, precise and up to date. also information & its spread speed , play sensentive role in the market efficiency . one of the assumptions of the efficient market is that investors have logic reaction to new information. But The evidence show that investors, overreact or underreact to new information. They tend to give over-value or under-value to new information. of course stock prices have a tendency to adjust themselves back to the equilibrium level in the subsequent period.
The objective of this paper is to document stock price behavior to examine the overreaction to earnings announcement in bear and bull market on the Tehran stock exchange, over the period from December 2000 through march 2006. we use from event study methodology. The results indicate that investors did not have overreact or underreact to earnings announcement in the short time on the Tehran stock exchange.