The Role of Financial Reporting Quality on the Relation between Reducing the Limitations of Dividend and Investment Decisions

Abstract

In theoretical foundations of accounting, the quality of financial reporting and its importance are indicated and strongly emphasized. The quality of financial reporting is an effective factor on investment decision making which can affect various dimensions of firms. This study aimed at investigating the relation between the qualities of financial reporting on reducing the limitations of dividend on investment decisions. In addition, the high importance of disclosure financial information in the present business world is the main reason to study this topic. In this study, the accepted data of firms in Tehran stock exchange have been selected annually for a period of time between 2006 to 2012. In this study, multivariable regression model was used to study the impact of financial reporting with quality on the restrictions through the policy of dividend on the investment. The pattern of Dechow model (2002) estimated by Mac Nicholez (2000) was also used. The results of this study showed that cash has impact on financial reporting and also the quality of financial reporting has impact on investment of listed companies in Tehran stock exchange.