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The relationship between intellectual capital and financial statements readability: the role of management characteristics

Hassan Mohammadzadeh Moghadam (Zahedan Branch, Islamic Azad University, Zahedan, Iran)
Mahdi Salehi (Ferdowsi University of Mashhad, Mashhad, Iran)
Zohreh Hajiha (East Tehran Branch, Islamic Azad University, Tehran, Iran)

Journal of Facilities Management

ISSN: 1472-5967

Article publication date: 16 November 2021

Issue publication date: 27 March 2023

537

Abstract

Purpose

The present study aims to investigate the relationship between intellectual capital and the readability of financial statements with the mediating role of management characteristics of companies listed on the Tehran Stock Exchange. In other words, this research tries to find the answer to whether intellectual capital can positively affect the readability of financial statements.

Design/methodology/approach

A multivariate regression model was used to test the hypotheses for this purpose. The research hypotheses were tested using a sample of 1,309 observations listed on the Tehran Stock Exchange from 2012 to 2018 and a multiple regression model based on panel data and fixed-effects models.

Findings

The results indicate that intellectual capital has a positive and significant relationship with the readability of financial statements, which means that with increasing intellectual capital in companies, financial statements’ readability also increases. Based on the hypothesis test results, it has been determined that narcissism, accrual and real earnings management have a negative effect on the relationship between intellectual capital and the readability of financial statements.

Originality/value

Since the present study examines such an issue in emerging markets, it provides users, analysts and legal entities with useful information about management’s inherent and acquired characteristics that significantly impact the purchase of audit opinion. This study’s results also contribute to developing science and knowledge in this field and close the literature gap.

Keywords

Citation

Moghadam, H.M., Salehi, M. and Hajiha, Z. (2023), "The relationship between intellectual capital and financial statements readability: the role of management characteristics", Journal of Facilities Management, Vol. 21 No. 2, pp. 221-241. https://doi.org/10.1108/JFM-08-2021-0088

Publisher

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Emerald Publishing Limited

Copyright © 2021, Emerald Publishing Limited

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