Investigating the effect of major shareholder ownership role on transparency in financial reporting

Document Type : Original Article

Authors

1 M.A. in Financial Management, Qazvin Islamic Azad University, Qazvin, Iran

2 M.A. in Accounting, Ghazali Institute of Higher Education, Qazvin, Iran

Abstract

Present research aims to study the effect of major shareholder ownership role on financial reporting transparency in firms listed on Tehran Stock Exchange. To this end, three indicators (accruals, disclosure quality and audit quality) were used to measure transparency in financial reporting according to Hassas Yeganeh et al. (2018). The study sample consisted of 82 firms during the period 2010-2019. Hypothesis tests were conducted using linear regression and EViews. The results showed that there was not a significant relationship between major shareholder and accruals. However, major shareholder had significant inverse relationships with disclosure quality and audit quality respectively.

Keywords

Main Subjects


Al-Duais, S., Malek, M., & Hamid, M. (2018). Corporate Ownership Structures and Real and Accrual-Based Earnings Management. Opcion. 34(17), 1053-1073.
Al-Khonain, S., & Al-Adeem, K. (2020). Corporate Governance and Financial Reporting Quality: Preliminary Evidence from Saudi Arabia. Financial Markets, Institutions and Risks. 4(1).
Arthur. N., Chen, H., & Tang, Q. (2019). Corporate Ownership Concentration and Financial Reporting Quality: International Evidence. Journal of Financial Reporting and Accounting. 17(4).
Asadi Karam, H., & Dehghan, A. (2017). The relationship corporate governance and financial characteristics with financial reporting transparency firms listed on the Tehran Stock Exchange. 3nd International Conference on Management, Accounting and Knowledge-based Economy. With Emphasis on the Resistance Economy. Iran. Tehran. (in Persian).
Baradaran Hasanzadeh, R., Badavarnahandi. Y., & Esmaeili, S. (2014). The effect of ownership structure on audit quality. Accounting and financial research, 6(23). (in Persian).
Baradaran Majelan. E., Rahmani, H, & Mesdagh, E. (2020). Study the effect of concentration of ownership on the relationship between internal corporate governance and audit quality. . 1nd International Conference on Challenges and New Solutions in Industrial Engineering, Management and Accounting. Iran. Sari. (in Persian).
Crisostomo, V. L., Brandao, I. D. F., & Lopez-Iturriaga, F. J. (2020). Large shareholders’ power and the quality of corporate governance: An analysis of Brazilian firms. Research in International Business and Finance, 51, 1-15.
DeAngelo, L. E,. (1981). Auditor Size and Audit Quality. Journal of Accounting and Economics, 3(3), 183-199.
Defond, M, Francis, J., & Wong, T. (2000). Auditor Industry Specialization and Market Segmentation: Evidence from Hong Kong. Auditing, 19, 49-67.
Dharan, B. G. (2003). Accruals Management with Financing and Investing Transactions. www.ruf.rice.edu/.../dharan-accruals_Management_ with_Financing_and_Investing_Transactions-12-03.pdf.
Ebrahimi, S. K., Jalali. F., & Bahraminasab, A. (2021). Study the Impact of State Ownership on Financial Reporting Transparency and Fraud. 2nd International Conference on Challenges and New Solutions in Industrial Engineering, Management and Accounting. Iran. Damghan University. (in Persian).
Fan, J., & Wong, T. (2005). Do External Auditors Perform a Corporate Governance Role in Emerging Markets? Journal of Accounting Research, 43, 35-72.
Guizani. M., & Abdalkrim. G. (2021). Ownership Structure and Audit Quality: The Mediating Effect of Board Independence. Corporate Governance.
Hasasyeganeh, Y., Behshoor, E., & Shokri Kiyani, M. (2018). The relationship between financial reporting transparency and effective tax rates. Financial accounting and auditing research, 10(38), 1-30. (in Persian).
Hochberg, Y. V. (2003). Venture Capital and Corporate Governance in the Newly Public Firm. Available at: http://ssrn.com/ id474542.pdf
Jones, J. (1991). Earnings Management during Import Relief Investigations. Journal of Accounting Research, 29(2), 193-228.
Khaje Nasiri, E. (2013). The effect of ownership structure (concentration and composition) on the quality of disclosure. Master Thesis. Sistan and Baluchestan University. Faculty of Management and Accounting. (in Persian).
Khodaei, M., & Yahyaei, M. (2011). Study the Relationship between Financial Reporting Quality and Investment Efficiency in Tehran Stock Exchange. Management Accounting, 3(5), 1-15. (in Persian).
Kohansal, S., Rostami. SH., & Rostami. Z. (2017). The Impact of Corporate Governance Mechanism on Financial Reporting Transparency. Corporate Ownership & Control, 14(3).
Kwarbai, J. (2020). Concentrated Ownership Structure and Audit Quality: New Evidence from Nigeria. European Journal of Business Management and Research, 5(3), 1-6.
Mohammadazadi,  Z.,  &  Yarmohammadi,  E.  (2015).  Institutional  Ownership,  Ownership Concentration, and Audit Fees. Journal of Auditing Knowledge, 15(6), 165-176 (in Persian).
Moghimi Kheyrabadi, J., & Razavi, S. M. (2020). Concentration of ownership, institutional ownership and audit quality. 7th  International Conference on Modern Management and Accounting Studies in Iran. Iran. Tehran. (in Persian).
Mustafa, A. S., Che-Ahmad, A., & Chandren, S. (2018). Ownership Structure and Audit Quality. Academy of Accounting and Financial Studies Journal, 22(5).
Pooraghajan Sarhamami, A., & Khanlar, F. (2018). Study the relationship between corporate governance mechanisms with financial reporting transparency on firms listed on the Tehran Stock Exchange. International Conference on Management, Accounting and Knowledge Economy. Iran. Mashhad. (in Persian).
Rahimiyan, N., Taghavifard, M. T., & Maleki Dizaji, A. (2017). The relationship between accruals and audit opinion. New research in accounting and auditing, 1(2), 37-63. (in Persian).
Rahnamayeroodposhti, F., Nikoomaram, H., & Shahverdiyani, S. (2012). Strategic financial management value creation. Hakam Bashi Publications. Tehran. (in Persian).
Sheykhloo, H., & Mohammadi, A. (2016). The relationship between audit quality, ownership structure and the accruals quality. National Conference on Auditing and Financial Supervision of Iran. Iran. Mashhad. (in Persian).