Investigating the Effect of Inflation Disclosure on Improving the Information Content of the Financial Reporting

Vali Khodadadi, Ali Vaez and Hashem Alisufi

International Journal of Financial Research, 2014, vol. 5, issue 3, 96-109

Abstract: This study aims to investigate the inflation disclosure on improving the information content of the financial reporting of the accepted companies in the Tehran stock exchange market. To investigate this issue three hypotheses were provided and tested. To this aim, 120 accepted companies¡¯ data in the Tehran stock exchange was analyzed using the data panel method with fix effects during 2002 to 2012. General results showed that inflation does not have a significant effect on the information content of the financial reporting of the companies in Tehran stock exchange. Specifically, the results of the first hypothesis showed that there is no significant difference between the information content of modified accounting earnings and the inflation effects compared with the reported accounting earnings in prediction of operating cash flow. The results of the second hypothesis showed that there is not either a significant difference between the modified accounting earnings information content and the inflation effects compared with the reported accounting earnings in prediction of stock return. The results of the third hypothesis also showed that there is not a significant difference between the modified accounting earnings information content and the inflation effects compared with the reported accounting earnings in prediction of abnormal return.

Keywords: inflation; information content of financial reporting; monetary items; non-monetary items (search for similar items in EconPapers)
Date: 2014
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