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The Effect of Financial Constraints on Relationship between Financial Reporting Quality and Investment Inefficiency

Author

Listed:
  • Yadollah Tariverdi

    (Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran,)

  • Mokhtar Keivanfar

    (Department of Accounting, Central Tehran Branch, Islamic Azad University, Tehran, Iran)

Abstract

Today, any research about the influence of accounting information in great range of stock holder decisions makers in companies leads to the better understanding of the method and role of information and its better disclosure. Current work was conducted aiming at investigating role of financial constrains in relationship between financial reporting quality and investment inefficiency. Research statistical population includes companies listed in Tehran Stock Exchange during 2008 2013. 112 companies were considered as statistical sample considering predetermined criteria. Data in RahavardNovin Software were used for data collection. Also, financial statements of the companies listed in Tehran Stock Exchange were used. Multivariate regression model, the fixed effects model and generalized least squares estimation method were used for data analysis using Eviews software. In this regression model, variables of growth, size, asset return, cash and objective assets were entered into analysis as control variables. Analysis results show that financial constraints increase opposite effect of financial reporting quality on investment inefficiency.

Suggested Citation

  • Yadollah Tariverdi & Mokhtar Keivanfar, 2017. "The Effect of Financial Constraints on Relationship between Financial Reporting Quality and Investment Inefficiency," International Journal of Economics and Financial Issues, Econjournals, vol. 7(5), pages 161-168.
    • Handle: RePEc:eco:journ1:2017-05-19
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    References listed on IDEAS

    as
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    3. Jensen, Michael C, 1986. "Agency Costs of Free Cash Flow, Corporate Finance, and Takeovers," American Economic Review, American Economic Association, vol. 76(2), pages 323-329, May.
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    Keywords

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    JEL classification:

    • E44 - Macroeconomics and Monetary Economics - - Money and Interest Rates - - - Financial Markets and the Macroeconomy
    • G32 - Financial Economics - - Corporate Finance and Governance - - - Financing Policy; Financial Risk and Risk Management; Capital and Ownership Structure; Value of Firms; Goodwill

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