Evaluating Effect of Corporate Governance Mechanisms on Financial ‎‎Reporting Quality

Abstract

The present study aims at evaluating effects of some of the most important corporate governance mechanisms on improvement of financial reporting quality in Tehran stock exchange. Therefore, it studies corporate governance mechanisms including ownership percentage of institutional investors, ownership centralization, type of auditor, and independency of members of board of directors and their effect on financial reporting quality (Barth, 2001). Also, the research uses control variables, e.g. firm size, financial leverage, and market to book value ratio. This is an applied and causal research considering its type and method. Tehran stock exchange listed firms constitute statistical population of the research. The sample was selected using systematic exclusion sampling method and imposing conditions of the research variables to 75 firms of 17 industries during 2012-2017. Statistical technique of panel data regression was used to analyze data and test the hypotheses. According to the results, there is a positive and meaningful relation between ownership centralization, and financial reporting quality. Additionally, there is not any relation between variables of ownership percentage of institutional investors, type of auditor, independency of members of board of directors and financial reporting quality.