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The effect of internal controls on financial reporting quality in Iranian family firms

Mahmoud Lari Dashtbayaz (Faculty of Economics and Business Administration, Ferdowsi University of Mashhad, Mashhad, Islamic Republic of Iran)
Mahdi Salehi (Ferdowsi University of Mashhad, Mashhad, Islamic Republic of Iran)
Toktam Safdel (Gaenat Branch, Islamic Azad University, Qaenat, Islamic Republic of Iran)

Journal of Family Business Management

ISSN: 2043-6238

Article publication date: 2 April 2019

Issue publication date: 16 August 2019

Abstract

Purpose

The purpose of this paper is to investigate the relationship between internal controls weakness and financial reporting quality and the effect of family ownership on the mentioned relationship in Iranian listed firms.

Design/methodology/approach

In this way, the authors included the number of 139 firms from 2013 to 2017, of which 28 were family firms. The hypotheses are analyzed based on panel data and means comparison.

Findings

The results illustrated that weakness in internal controls has a significant negative relationship with financial reporting quality. In other words, internal controls weakness decreases the quality of financial reporting quality. Moreover, the results showed that being familial does not affect the aforementioned relationship.

Originality/value

Consequently, there is no suitable criteria to distinguish family firms and there is a need to take them into serious consideration because very few studies have been conducted focusing on this issue in Iran, as it is considered an argumentative subject to be discussed in the Iranian market.

Keywords

Citation

Lari Dashtbayaz, M., Salehi, M. and Safdel, T. (2019), "The effect of internal controls on financial reporting quality in Iranian family firms", Journal of Family Business Management, Vol. 9 No. 3, pp. 254-270. https://doi.org/10.1108/JFBM-09-2018-0047

Publisher

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Emerald Publishing Limited

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