The Impact of Financial Reporting Quality and Debt Maturity on the Investment Efficiency

Subject Areas :

Yadollah Noorifard ^{1 *} , Hassan Chenari Bouket ²

1 - -استادیار گروه حسابداری دانشکدۀ مدیریت و حسابداری دانشگاه آزاد اسلامی ـ واحد تهران جنوب،
2 - Master of Science in Accounting, Department of Accounting, Islamic Azad University of South Tehran

Received: 2016-03-09 Accepted : 2016-05-30 Published : 2016-04-20

Keywords: Financial Reporting Quality, Information Asymmetry, Investment Efficiency, Debt Maturity,

Abstract :

This study investigates the impact of financial reporting quality and debt maturity on the investment efficiency in the companies registered in Tehran Stock Exchange during the years between 2009 to 2013. In this research, for measuring the quality of financial reporting, we have used Francis et al. (2005) model, and for debt maturity date of short-term debt ratio to total debt and investment efficiency, we have applied Biddle et. al. (2009) model. Data analysis of this research was conducted using multiple linear regression and concatenated data. The findings of the first hypothesis test have demonstrated that there is a significant relevance between financial reporting quality and efficiency of investment. The findings of the second hypothesis have shown that there is a significant relevance between the financial reporting quality and the investment efficiency. In other words, we could reach to the conclusion that the improvement of the quality of financial reporting and the reduction of debt maturity due to reduced information asymmetry and prolonging the period of debt maturity contracts and strengthening of creditors monitoring on senior managers and the whole company operation, leads to increased efficiency of investment.