The impact of the predictive power of accounting information on the risk arising from information transparency deficiency

Mahdi Salehi, Aiub Ghorbani and Zohreh Hajiha

Accounting Research Journal, 2026, vol. 39, issue 4-5, 645-668

Abstract: PurposeIdentifying factors that influence the risk of information transparency deficiency is crucial in comparing an economic entity’s credit risk with that of other entities and the entity’s competitiveness. This study aims to examine the effect of the predictive power of accounting information on the risk of information transparency deficiency.Design/methodology/approachThis study was conducted on all companies listed on the Stock Exchange over 14 years, from 2010 to 2023.FindingsA lack of information transparency was found to be strongly and adversely related to accounting conservatism, according to the results. In addition, there was an inverse relationship between the probability of information transparency deficiency and the predictive power of profitability. A substantial negative relationship existed between the likelihood of information transparency deficiency and the feedback value of accounting information. The factors that improved the quality of financial information and reduced the flow of informational asymmetry were accounting conservatism, earnings predictive power and the feedback value of accounting information. As a result, investors, creditors and shareholders were better able to understand and predict managers’ and the company’s performance. Thus, managers’ accumulation of negative news over extended periods is reduced, and consequently, the risk of information transparency deficiency decreases.Originality/valueVarious studies have previously examined the predictive power of accounting information by using various indicators such as accounting conservatism, discretionary accruals, stock prices, company value and the explanatory power of accounting information. However, this study used three indicators, including accounting conservatism, earnings predictive power and the feedback value of accounting information. This approach simultaneously provides a view of past research on accounting conservatism and incorporates two new variables of earnings predictive power and the feedback value of accounting information to assess the predictive power of accounting information. Despite the potential usefulness of the findings, this study has not yet been carried out.

Keywords: Predictive power of accounting information; Risk of information transparency deficiency; Accounting conservatism; Earnings predictive power; Feedback value of accounting information (search for similar items in EconPapers)
Date: 2026
References: Add references at CitEc
Citations:

Downloads: (external link)
https://www.emerald.com/arj/article/39/4-5/645/138 ... -power-of-accounting (text/html)
https://www.emerald.com/arj/article-pdf/39/4-5/645 ... j-07-2025-0267en.pdf (application/pdf)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:eme:arjpps:arj-07-2025-0267

DOI: 10.1108/ARJ-07-2025-0267

Access Statistics for this article

Accounting Research Journal is currently edited by Yaowen Shan and DaiFei "Troy" Yao

More articles in Accounting Research Journal from Emerald Group Publishing Limited
Bibliographic data for series maintained by Emerald Support ().