Investigating the Impact of Threat of Withdrawal of Block Shareholders on the Quality of Financial Information Reporting

Abstract

The main objective of this paper is to examine the impact of the quality of financial reporting on threats of block shareholders of the companies listed in Tehran Stock Exchange. Therefore, the Herfindahl index is used as a benchmark to measure the competitiveness of block shareholders. Also, the quality of the financial information is also examined from four aspects including discretionary accruals quality, discretionary income, and cash flows over the remaining accruals. The population of this study is companies listed in Tehran Stock Exchange and a sample of 140 companies listed in Tehran Stock Exchange is selected and studied from 2002 to 2012. Multivariate linear regression analysis is used to test the research hypothesis. The research hypothesis testing results showed a positive relation between the quality of financial reporting standards and the threat of withdrawal of block shareholders. Thus, the results showed that the threat of withdrawal of block shareholders as an important factor plays a significant role in revealing by directors.