Abstract
This paper aims to evaluate the relationship between the quality of reporting and efficiency of investment in companies registered at Tehran Stock Exchange Market during 2010-2014 (Iranian calendar) period. The population consists of manufacturing firms registered at Tehran Stock Exchange and the statistical sample includes 126 companies. To explore the assumptions of the research, secondary data, as well as audited balance sheets have been used to collect the data. The data have been analyzed using descriptive and inferential methods at two levels and via Panel Yapold tests. Reliability for variables has been verified using Luin, Leen and Chu methods for data related to the study. The results coming out of the study have been obtained by financial and monetary data of the companies registered at Tehran Stock Exchange during the years between 2010 and 2014 and have been analyzed. It was illustrated that not only companies that used higher qualities of reporting had better investments, but also the higher quality of reporting itself made the investments more efficient. Moreover, the results showed that there is negative and significant relation between too much investment and quality of financial reporting and between too little investment and the quality of reporting. Keywords: quality of reporting, investment efficiency, Tehran Stock Exchange. JEL Classification: M41, M42, G32
Highlights
Investment carried out by companies has always been considered as a means to develop and prevent recession and burnout in various matters
Investment efficiency means the acceptance of projects with net worth being positive at the current time and inefficiency means the selection of projects with current negative net value or not choosing the opportunities if investment
Financial budget resources according to the necessity of the information and the feasibility studies for the investments have great influence on the quality of investment and reporting
Summary
Investment carried out by companies has always been considered as a means to develop and prevent recession and burnout in various matters. The quality of information that is going to be available to users has impacts on the decisions This is why the quality of the provided data is so important to companies. The quality of financial reports is defined as the power of financial statements to transfer the operational information of the company and to predict the cash flow for the investors. According to this view, because accruals improve on the value of benefits through diminishing the impacts of unstable fluctuations in cash flows (Dechow & Dichev, 2002), in this paper, the quality of accruals for working capital has been considered as an alternative to financial reporting. The researchers showed that efficiency of investment is influenced by methods of financial reporting that could be influential on stock market (assuming that market could be efficient or semi-efficient)
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