The Effect of Internal Quality Control on the Relationship between Financial Reporting Quality and Mass Behavior in Investors

Subject Areas : Ethics and accounting

Zeinab  Rezaei ¹ (Assistant Professor, Department of Accounting, Shushtar Branch, Islamic Azad University, Shushtar, Iran)
Ali  Tamoradi ² (Instructor, Department of Accounting, Ramhormoz Branch, Payam Noor University, Ramhormoz, Iran)

Received: 2022-08-13 Accepted : 2022-10-09 Published : 2022-06-22

Keywords: stock exchange, Financial Reporting Quality, Mass Behavior, Investors, Internal Quality Control (IQC),

Abstract :

The purpose of the present study is to review the effect of internal quality control (IQC) on the relationship between financial reporting quality and mass behavior of the accepted corporations' investors in Tehran Stock Exchange. The method of study was descriptive-analytic which used the statistical software of EViews 10 for data analysis. In this research, 150 corporations (1050 years of participation) were chosen for the research hypothesis testing from 2013 to 2020. For the research hypothesis testing, multi-vitiate regression models with panel data were used. The results showed that financial reporting quality has a significant effect on the mass behavior of the accepted corporations' investors in Tehran Stock Exchange. Moreover, IQC increases the negative correlation between financial reporting quality and mass behavior of the accepted corporations' investors in Tehran Stock Exchange. According to the research results, it can be asserted that besides financial and nonfinancial factors, the investors should pay attention to the role of financial reporting quality as an important criterion in decision making. Furthermore, the board of directors and audit committee members in corporations can take steps to increase financial reporting quality and decrease the investors' mass behavior through consistent and accurate evaluation and supervision over the process of internal control.

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