Transparency of Financial Reporting, Audit Report and Changes in Corporate Capital Structure

Document Type : Original Article

Authors
hosein moghadam 1
Negar Khosravi pour 2
Zahra Lashgari 3
gholamreza farsad 3
Afsaveh Tavangar 4
1 Accounting group. Central Tehran Branch. Islamic Azad University,Tehran.Iran. Ho.moghadam1394@gmail.com
2 Assistant Prof . accounting group. Central Tehran Branch. Islamic Azad University , Tehran. Iran
3 Accounting group. Central Tehran Branch. Islamic Azad University , Tehran. Iran
4 Accounting group. Central Tehran Branch. Islamic Azad University , Tehran. Iran.
Abstract
In this study, by using Delphi method, factors affecting transparency of financial reporting of companies have been identified and final effective factors have been selected through ANP network analysis process. Of the 20 factors identified, ten included: institutional ownership and board independence (corporate governance mechanisms), information accuracy and profit fluctuation (financial analysis), return on assets and return on capital (financial performance), competitiveness and size of company(environment),Cash Flows and Liquidity of Assets (Liquidity) have been identified as factors affecting the transparency of financial reporting. 129 firms were selected from Tehran Stock Exchange by Screening and studied over a 9-year period ending on 1397/29/12. Two models of accruals and earnings changes were used to estimate transparency in financial reporting. Using composite linear regression based on panel data analysis model and fixed effects, the relationship between the level of transparency in financial reporting and its influencing factors was investigated.The results showed that the relationship between the effective factors and the level of financial transparency in each model was different but the accrual model had more explanatory ability and reliability.In addition, the results showed that the long-term financing model was effective on the level of transparency of corporate financial reporting, and that firms that used debt had a higher level of financial reporting due to debt pressure (creditors). Finally, examining the effect of the type of auditor's statement on the level of financial reporting transparency showed that the companies subject to the Unmodified Opinion had greater financial transparency.
Keywords
Reporting Transparency
Financing Pattern
Accruals
ANP Network Analysis Process
Changes in capital structure
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