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:: Volume 8, Issue 16 (3-2024) ::
aapc 2024, 8(16): 185-208 Back to browse issues page
The Relationship between the Readability of Financial Reporting and the Company's Cost of Capital: The Moderating Role of Financial Reporting Tone
Mohammad Reza Nikbakht 1, Soraya Weysihesar2 , Mohammad Pourkarim3
1- Assistant Professor of Accounting,Faculty of Management, University of Tehran, Tehran, Iran.(Corresponding Author) ) & Assistant Professor of Accounting,Faculty of Management, University of Tehran, Tehran, Iran.(Corresponding Author) ) , mnikbakht@ut.ac.ir
2- MSc of Accounting, KAR Higher Education Institute, Qazvin, Iran(soraiaweysihesar@yahoo.com) & MSc of Accounting, KAR Higher Education Institute, Qazvin, Iran(soraiaweysihesar@yahoo.com)
3- Assistant Professor of Accounting, Islamic Azad University, Heris Branch, Heris, Iran(pourkarimv@yahoo.com) & Assistant Professor of Accounting, Islamic Azad University, Heris Branch, Heris, Iran(pourkarimv@yahoo.com)
Abstract:   (1131 Views)
The cost of capital is one of the most important concepts used in many financial and management decisions that are affected by several factors. Recent studies have shown that less readability of financial reports reduces the ability of investors to process and interpret annual reports, increases information risk and, as a result, the cost of capital. Furthermore, the relationship between the readability of financial reporting and the cost of capital depends on the tone of a company's published reports. Therefore, the purpose of this research is to investigate the moderating role of the tone of financial reporting on the relationship between the readability of financial reporting and the cost of capital of companies. In this regard, 105 companies admitted to the Tehran Stock Exchange were selected by systematic elimination method and examined in the period from 2016 to 2022. To evaluation and analyze the data, the EViews software was used, and to estimate the patterns, regression analysis with combined data was used. The results show that the lower the readability of financial reports, the higher the cost of capital for companies. In addition, the pessimistic tone of financial reports has an increasing moderating effect on the intensity of the relationship between less readability of financial reports and companies' cost of capital. By focusing on the textual features of company disclosure, the current research provides a good ground for research on the determinants of the cost of capital with new evidence and furthers researchers' understanding of how non-quantitative disclosure affects capital market participants. Furthermore, it provides empirical support for regulators' claims about the importance of companies providing clear and concise disclosure to their shareholders
Keywords: Readability of Financial Reporting, Tone of Financial Reporting, Cost of Capital
Full-Text [PDF 850 kb]   (461 Downloads)    
Type of Study: Research | Subject: Special
Received: 2024/03/4 | Accepted: 2024/03/19 | Published: 2024/06/17
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Nikbakht M R, Weysihesar S, Pourkarim M. The Relationship between the Readability of Financial Reporting and the Company's Cost of Capital: The Moderating Role of Financial Reporting Tone. aapc 2024; 8 (16) :185-208
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Volume 8, Issue 16 (3-2024) Back to browse issues page
دوفصلنامه علمی حسابداری ارزشی و رفتاری journal of Value & Behavioral Accounting
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