The effect of corporate culture in the form of competitive values and financial reporting quality:Change management and culture change

Articles in Press

Document Type : Research Paper

Authors

1 Department of Accounting, Faculty of Economic and Administrative Sciences, University of Isfahan, Isfahan, Iran

2 Associate Professor of Accounting, University of Isfahan, Isfahan, Iran.

3 Department of Economics, Faculty of Economic and Administrative sciences, University of Isfahan, Isfahan, Iran

10.22103/jak.2025.25337.4183

Abstract

Objective : High-quality financial information is the foundation of economic decision-making in capital markets. Organizational culture, as an internal and informal mechanism, plays a significant role in shaping financial reporting practices. Managerial change may also influence financial reporting quality by altering the cultural orientation of a firm. This study investigates the impact of corporate culture dimensions—based on the competing values framework—on financial reporting quality, along with the roles of cultural change and managerial turnover.

Method: This applied and descriptive research relies on documentary data collection and panel data analysis. The research model is estimated using ordinary least squares with firm-level clustered standard errors and controls for year and industry effects. Corporate culture is measured through textual analysis of annual board reports. The sample includes 169 firms listed on the Tehran Stock Exchange over the period 2014–2023.

Findings: The results indicate that an innovation-oriented culture has a significant positive effect on financial reporting quality, while competition- and control-oriented cultures have negative effects. A participation-oriented culture shows no significant impact. Additionally, cultural change improves reporting quality only in competition- and control-oriented cultures. CEO turnover has no moderating effect on the relationship between organizational culture and reporting quality.

Conclusion: The type and evolution of organizational culture—particularly in centralized structures—play a crucial role in enhancing financial reporting quality. These findings are valuable for policymakers, managers, and investors seeking greater financial transparency and governance effectiveness.

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Main Subjects

Journal of Accounting Knowledge

Articles in Press, Accepted Manuscript
Available Online from 16 August 2025

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History

  • Receive Date: 27 May 2025
  • Revise Date: 13 August 2025
  • Accept Date: 16 August 2025

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