The Mediating Role of Financial Reporting Quality on the Relationship between Financial Statement Comparability and Cash Holdings

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MEHRABANPOUR MOHAMMAD REZA; FARAJI OMID; Sajadpour Reza

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Journal: THE IRANIAN ACCOUNTING AND AUDITING REVIEW Year:2020 | Volume:27 | Issue:1 Page(s): 132-153

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Title

The Mediating Role of Financial Reporting Quality on the Relationship between Financial Statement Comparability and Cash Holdings

Author(s)

MEHRABANPOUR MOHAMMAD REZA | FARAJI OMID | Sajadpour Reza | Issue Writer Certificate

Keywords

Financial statement comparabilityQ1

Corporate cash holdingsQ1

Financial reporting qualityQ1

Abstract

Objective: The purpose of this study is to examine the relationship between Financial statement comparability on cash holdings and the mediating role of Financial reporting quality in firms listed on the Tehran Stock Exchange (TSE). Methods: Using data from TSE-listed firms from 2011 to 2017, this study employs multiple regression models and Sobel test to testing the research hypotheses. Results: The results show that Financial statement comparability significantly reduces Corporate cash holdings. The results also suggest that Financial reporting quality (disclosure quality and discretionary accrual) does not have a significant mediating effect on the relationship between comparability and cash holdings. These findings are robust to alternative measures of comparability and cash holdings. Also, additional test shows that trade credit has no mediating role in relationship between Financial statement comparability and cash holdings. Conclusion: The results show that investors and creditors rely on financial statements in their economic decision making, thus it is appropriate for regulators, supervisor institutions, and corporate governance bodies to place particular importance on the comparability of financial information. According to the Iranian capital market context and high inflationary economy, firms with high Financial statement comparability have easy access to bank loans with low cost. Thus, firms with high financial statements comparability hold low cash. Also, the Iranian capital market context has different context, because of low agency problem and information asymmetry and Financial reporting quality has not significant effect on information asymmetry. Thus, Financial reporting quality has not mediating role on the relationship between comparability and cash holdings.

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APA: Copy

MEHRABANPOUR, MOHAMMAD REZA, FARAJI, OMID, & Sajadpour, Reza. (2020). The Mediating Role of Financial Reporting Quality on the Relationship between Financial Statement Comparability and Cash Holdings. THE IRANIAN ACCOUNTING AND AUDITING REVIEW, 27(1 ), 132-153. SID. https://sid.ir/paper/358440/en

Vancouver: Copy

MEHRABANPOUR MOHAMMAD REZA, FARAJI OMID, Sajadpour Reza. The Mediating Role of Financial Reporting Quality on the Relationship between Financial Statement Comparability and Cash Holdings. THE IRANIAN ACCOUNTING AND AUDITING REVIEW[Internet]. 2020;27(1 ):132-153. Available from: https://sid.ir/paper/358440/en

IEEE: Copy

MOHAMMAD REZA MEHRABANPOUR, OMID FARAJI, and Reza Sajadpour, “The Mediating Role of Financial Reporting Quality on the Relationship between Financial Statement Comparability and Cash Holdings,” THE IRANIAN ACCOUNTING AND AUDITING REVIEW, vol. 27, no. 1 , pp. 132–153, 2020, [Online]. Available: https://sid.ir/paper/358440/en

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