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

Yasser Rezaei Pitenoei (Assistant Professor of Accounting, University of Guilan, Rasht, Iran)
Mehdi Safari Gerayli (Department of Accounting, Bandargaz Branch, Islamic Azad University, Bandargaz, Iran)
Ahmad Abdollahi (Department of Economics, University of Algarve, Faro, Portugal)

International Journal of Islamic and Middle Eastern Finance and Management

ISSN: 1753-8394

Article publication date: 14 January 2021

Issue publication date: 4 June 2021

534

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

Citation

Rezaei Pitenoei, Y., Safari Gerayli, M. and Abdollahi, A. (2021), "Financial reporting quality and firms’ information environment: a case of Iranian firms", International Journal of Islamic and Middle Eastern Finance and Management, Vol. 14 No. 3, pp. 541-560. https://doi.org/10.1108/IMEFM-04-2019-0146

Publisher

:

Emerald Publishing Limited

Copyright © 2020, Emerald Publishing Limited

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