Financial reporting quality and firms’ information environment: a case of Iranian firms

Yasser Rezaei Pitenoei, Mehdi Safari Gerayli and Ahmad Abdollahi

International Journal of Islamic and Middle Eastern Finance and Management, 2021, vol. 14, issue 3, 541-560

Abstract: Purpose - The purpose of this study is to investigate the relationship between financial reporting quality and information environment (IE) in firms listed on the Tehran Stock Exchange (TSE). Design/methodology/approach - In this study, composite measures were used as the proxy to measure financial reporting quality and IE. In this regard, a sample of 1,490 firm-year observations of the firms listed on the TSE during the years 2008 to 2017 and a multivariate regression model was used to examine the research hypothesis. Findings - Findings indicate that financial reporting quality has a positive relationship with firms’ IE. This result is robust to the alternate measure of financial reporting quality and endogeneity problem. Originality/value - The present study is the first study to develop a composite measure for the firms’ IE in the Iranian capital market. As a result, it not only expands the theoretical literature on the firms’ IE but also helps policymakers, regulators, investors and financial reporting users make informed decisions.

Keywords: Financial reporting quality; Firms’ information environment (IE); Composite measures (search for similar items in EconPapers)
Date: 2021
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Persistent link: https://EconPapers.repec.org/RePEc:eme:imefmp:imefm-04-2019-0146

DOI: 10.1108/IMEFM-04-2019-0146

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