To Survey the Relationship between Financial Reporting Quality & Investment Efficiency in Tehran Stock Exchange

Subject Areas : Management Accounting

Mohammad  Khodaei Valahzaghard ¹ (ندارد)
Monireh  Yahyaei ² (ندارد)

Received: 2010-05-10 Accepted : 2010-08-06 Published : 2010-06-22

Keywords: financial reporting quality, Investment Efficiency, Adverse Selection, agency costs,

Abstract :

In this study the Relationship between Financial Reporting Quality and InvestmentEfficiency in the 210 affiliated companies in Tehran Stock Exchange, between theyears 2005 to 2009 has been examined. It is assumed that increasing the Quality ofFinancial Reporting can improve Investment Efficiency. But, there has been littleempirical evidence to supporting this claim to date. In order to compare this claim anegative Relationship between Quality of Financial Reporting and Lack of Efficiencyof Investment is found. Under investment and Overinvestment both are examples ofthe inefficiency of investment. The results show that a negative andsignificant relationship exists between the Quality of Financial Reporting and theUnderinvestment. Also the Relationship between the Quality of Financial Reportingand Overinvestment is negative, but not significant