The Effect of Financial Reporting Readability on the Relationship between Managers' Opportunistic Behaviors Including Overconfidence and Smoothing and Earnings Management in Divergence of Investors' Opinions
1
Department of Accounting, Payame Noor University, Tehran, Iran
2
Assistant Professor, Department of Accounting, Zanjan Branch, Islamic Azad University, Zanjan, Iran
10.22103/jak.2024.22659.3998
Abstract
Purpose:The present study aimed to trace the effect of financial reporting's readability on the relationship between managers' opportunistic behaviors including overconfidence, smoothing and earnings management in divergence of investors' opinions.
Method: In order to achieve the objectives of the study, a sample of 124 listed Firms in the stock exchange that were selected according to systematic exclusion pattern was collected for a 10-year period from 2013 to 2022. To test the research hypotheses, a linear multiple regression model was used. To measure divergence of investors' opinions, Silva and Serqueira (2021) model and Jones adjusted model and earnings smoothing with Icle index and overconfidence of managers with overinvestment model and Fog index were used to measure the readability of financial reporting.
Findings: The results of hypothesis testing indicated that earnings smoothing, earnings management and managers' overconfidence increase the divergence of investorsbeliefs in the market. Moreover, the readability of financial reporting affects these relationships.
Conclusion: By improving the readability of financial reports in The result can be said that the artificial earnings management will be reduced as necessary and the divergence of beliefs will be reduced. Also, by providing less complex financial statements, managers will have to disclose all their opinions, thereby increasing the transparency of the information sent to the market. In fact, by increasing the quality of information readability, financial reporting can help to bridge the relationship between earnings management, profit smoothing and overconfidence of managers with the The Investor Confidence is Impactful.
Ahmadi Farsani, F., & Mohammadi, M. (2024). The Effect of Financial Reporting Readability on the Relationship between Managers' Opportunistic Behaviors Including Overconfidence and Smoothing and Earnings Management in Divergence of Investors' Opinions. Journal of Accounting Knowledge, (), -. doi: 10.22103/jak.2024.22659.3998
MLA
Farshid Ahmadi Farsani; Mehdi Mohammadi. "The Effect of Financial Reporting Readability on the Relationship between Managers' Opportunistic Behaviors Including Overconfidence and Smoothing and Earnings Management in Divergence of Investors' Opinions". Journal of Accounting Knowledge, , , 2024, -. doi: 10.22103/jak.2024.22659.3998
HARVARD
Ahmadi Farsani, F., Mohammadi, M. (2024). 'The Effect of Financial Reporting Readability on the Relationship between Managers' Opportunistic Behaviors Including Overconfidence and Smoothing and Earnings Management in Divergence of Investors' Opinions', Journal of Accounting Knowledge, (), pp. -. doi: 10.22103/jak.2024.22659.3998
VANCOUVER
Ahmadi Farsani, F., Mohammadi, M. The Effect of Financial Reporting Readability on the Relationship between Managers' Opportunistic Behaviors Including Overconfidence and Smoothing and Earnings Management in Divergence of Investors' Opinions. Journal of Accounting Knowledge, 2024; (): -. doi: 10.22103/jak.2024.22659.3998
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