Investigating the Relationship between the Disclosure Quality Components and the External Investment Efficiency of Firms Listed in Tehran Stock Exchange

Document Type : Original Article

Authors

1 Assistant Professor in Accounting, Bu-Ali Sina University of Hamadan, Iran

2 Assistant Professor in Accounting, Bu-Ali sina University of Hamadan, Iran

3 M.A. Student of Accounting, Bu-Ali sina University of Hamadan, Iran

Abstract

Information asymmetry and the ambiguity in firms’ financial reporting can lead to the inefficient investments by managers. The inefficient investments decrease the shareholders’ wealth, too. One way to reduce information asymmetry and consequently increase the monitoring of managers’ behavior is providing the financial statements in a timely manner with greater reliability. In this research, the relationship between the total score of disclosure quality and its components (timeliness and reliability scores), and the efficiency of firm’s external investments (includes short-term and long-term investments) is studied in 168 firms listed in Tehran Stock Exchange between 2002 and 2013 time period. The research results show that the scores of timelines and reliability and the total score of disclosure quality are significantly associated to the efficiency of firm’s external investments.

Keywords

Journal of Iranian Accounting Review
Volume 3, Issue 9
April 2016
Pages 23-38

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