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).
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 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.
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.
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
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