The effect of the company's life cycle on the comparability of the financial statements, considering the moderating role of internal control weakness and audit quality
Subject Areas : Accounting
Mahla Adineh Pour
1
,
َAli Taghavi Moghaddam
2
*
1 - Department of Accounting, Shir.C., Islamic Azad University, Shirvan, Iran.
2 - Department of Accounting, Boj.C., Islamic Azad University, Bojnourd, Iran.
Keywords: Audit Quality, Comparability of Financial Statements, Maturity of the Company's Life Cycle, Weaknesses in Internal Controls.,
Abstract :
Purpose: Firms exhibit distinct financial and economic characteristics throughout their life cycle, which may influence financial statement preparation and presentation. This study examines the relationship between the maturity stage of the corporate life cycle and the comparability of financial statements among firms listed on the Tehran Stock Exchange and Iran Fara Bourse. Moreover, the moderating roles of internal control weaknesses and audit quality in this relationship are investigated.
Research Methodology: This study is applied in nature, ex-post facto, and based on real financial data. The statistical population includes all firms listed on the Tehran Stock Exchange and Iran Fara Bourse from 2016 to 2022. After applying systematic elimination criteria, a sample of 148 firms was selected. Data analysis was performed using multiple linear regression within a panel data framework, employing EViews software.
Findings: The results indicate a significant relationship between the maturity stage of the corporate life cycle and the comparability of financial statements. Additionally, it was found that internal control weaknesses and audit quality act as moderating factors that can strengthen or weaken this relationship.
Originality / Value: In recent decades, generally accepted accounting principles have emphasized the importance of financial statement comparability among firms. Meanwhile, corporate life cycle stages have gained increasing prominence in assessing firm status. To the best of our knowledge, this study is the first to incorporate the impact of corporate life cycle stages on financial statement comparability in the Iranian capital market.
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