Reactions of Borsa Istanbul Investors to Inflation Accounting Practices
DOI:
https://doi.org/10.63556/tisej.2025.1518Keywords:
Inflation Accounting, Stock Returns, Cumulative Abnormal Return, Borsa Istanbul, Financial ReportingAbstract
This study examines the reaction of Borsa Istanbul investors to inflation accounting practices and reveals the short-term impact of the “Net Monetary Position Gain/Loss” (NMPGL) item on stock returns. The anomaly in stock returns before and after financial statement announcements is analyzed. The sample of the study consists of stocks in the BIST-100 index. The performance of portfolios constructed according to the NMPG is evaluated with the cumulative abnormal return (CAR) method in various event windows. The findings reveal that stocks with positive NMPGL outperform stocks with negative NMPGL and that NMPGL is important for investors. The study also shows that stock prices generally fall after financial statement announcements and investors adopt a cautious approach. The research provides significant empirical evidence on the short-term effects of inflation accounting practices on stock prices. Particularly, shares of companies with positive NMPGL are found to be more attractive to investors, while companies with negative NMPGL experience greater value depreciation. This indicates that investors carefully analyze financial statements in their decision-making and that inflation accounting practices play a crucial role in the market in the short term. The results reveal a noticeable impact of inflation accounting on stock returns, showing that these effects are taken into account in investors' decision-making processes. The study highlights that accurate financial reporting in high-inflation environments is a factor that can enhance investor confidence.
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