Information Asymmetry Between Financial Reporting Quality and Investment Performance in Tehran Stock Exchange

Abstract

This study empirically tests the asymmetry of information between financial reporting quality and investment efficiency, which is discussed in the Tehran Stock Exchange. Investment performance as a concept means to accept projects with positive net present values and purposes of the inefficiency of investment through the investment opportunities (under investment) or to choose projects with negative net worth (over investment). In this study, the expected investment, growth opportunities as a function of the input model (2006) is used to measure it. To assess the quality of financial reporting and information asymmetry to model the quality of accruals M.C. Nichols (2002) and Chiang and Venkatesh (1968) is used. The survey of 90 companies listed in Tehran Stock Exchange, based on the information contained in the financial reports of companies in the years 1387 and 1388 was performed. The test of hypotheses done as liner and non-liner that the result showed practically there is not any significant relationship as liner and non-liner between the named variant in Tehran's stock exchange. However, it only showed a non-linear relationship between financial reporting quality and investment performance.