Accounting Earning Transparency and Capital Structure

Authors

https://doi.org/10.22105/aaa.v1i4.52

Abstract

Complete, on-time, and quality disclosure of financial information can lead to the transparency of such information and decrease information asymmetry. Among the published information of firms, earnings are of priority importance to many users; therefore, the issue of the transparency of accounting earnings is significant. This study investigates the accounting earning transparency and capital structure, where the relationship between accounting earnings and short-time liabilities, long-term liabilities, and the total liabilities representing the capital structure is investigated. The study's hypotheses were tested by applying financial data from 121 listed firms on the Tehran stock exchange from 2019 to 2023. The study results indicated no statistically significant relationship between accounting earnings transparency and capital structure in the listed firms of the Tehran stock exchange.

Keywords:

Accounting earning transparency, Capital structure, Short-time liabilities, Long-term liabilities, Quality of financial statements

References

  1. [1] Ghaemi, M. H., & Vatanparast, M. R. (2005). The study of the role of the accounting information on decreasing information asymmetry in Tehran’s stock exchange. Accounting and auditing reviews, 10(41), 85-103. (In Persian). https://www.sid.ir/paper/8308/fa
  2. [2] Khaleghi Moghaddam, H., & Khalegh, A. (2018). Firm transparency in Iran and the effects influencing it. Empirical studies in financial accounting, 6(21), 31-60. (In Persian). http://ensani.ir/fa/article/219904
  3. [3] Kuizick, R. S. (2004). Sarbanes-Oxley: effects on financial transparency. SAM advanced management journal (07497075), 69(1). https://kulzick.com/rksoift.htm
  4. [4] Bushman, R. M., Piotroski, J. D., & Smith, A. J. (2004). What determines corporate transparency? Journal of accounting research, 42(2), 207–252. https://doi.org/10.1111/j.1475-679X.2004.00136.x
  5. [5] Aggarwal, R., & Kyaw, N. A. (2009). International variations in transparency and capital structure: Evidence from European firms. Journal of international financial management & accounting, 20(1), 1–34. https://doi.org/10.1111/j.1467-646X.2009.01025.x
  6. [6] Cheung, Y.-L., Jiang, P., & Tan, W. (2010). A transparency disclosure index measuring disclosures: Chinese listed companies. Journal of accounting and public policy, 29(3), 259–280. https://doi.org/10.1016/j.jaccpubpol.2010.02.001
  7. [7] Haghighat, H., & Alavi, S. (2013). The investigation of the relationship between accounting earnings transparency and abnormal efficiency of shares in the accepted firms of Tehran stock exchange. Journal of financial accounting research, 5(1), 1–12. https://dor.isc.ac/dor/20.1001.1.23223405.1392.5.1.2.5
  8. [8] Barnea, A., Haugen, R. A., & Senbet, L. W. (1985). Agency problems and financial contracting. Journal of Banking & Finance, Elsevier, 11(1), 172-175. https://ideas.repec.org/a/eee/jbfina/v11y1987i1p172-175.html
  9. [9] Healy, P. M., & Palepu, K. G. (2001). Information asymmetry, corporate disclosure, and the capital markets: A review of the empirical disclosure literature. Journal of accounting and economics, 31(1–3), 405–440. https://doi.org/10.1016/S0165-4101(01)00018-0
  10. [10] Botosan, C. A. (1997). Disclosure level and the cost of equity capital. Accounting review, 72(3), 323–349. https://papers.ssrn.com/sol3/papers.cfm?abstract_id=2926
  11. [11] Diamond, D. W., & Verrecchia, R. E. (1991). Disclosure, liquidity, and the cost of capital. The journal of finance, 46(4), 1325–1359. https://onlinelibrary.wiley.com/doi/abs/10.1111/j.1540-6261.1991.tb04620.x
  12. [12] Leftwich, R. W., Watts, R. L., & Zimmerman, J. L. (1981). Voluntary corporate disclosure: The case of interim reporting. Journal of accounting research, 19, 50–77. https://doi.org/10.2307/2490984
  13. [13] Gelb, D. S., & Zarowin, P. (2002). Corporate disclosure policy and the informativeness of stock prices. Review of accounting studies, 7, 33–52. https://doi.org/10.1023/A:1017927530007
  14. [14] Lang, M. H., & Lundholm, R. J. (2000). Voluntary disclosure and equity offerings: Reducing information asymmetry or hyping the stock? Contemporary accounting research, 17(4), 623–662. https://doi.org/10.1506/9N45-F0JX-AXVW-LBWJ
  15. [15] Modigliani, F., & Miller, M. H. (1958). The cost of capital, corporation finance and the theory of investment. The american economic review, 48(3), 261–297. https://www.jstor.org/stable/1809766
  16. [16] Yu, F. (2005). Accounting transparency and the term structure of credit spreads. Journal of financial economics, 75(1), 53–84. https://doi.org/10.1016/j.jfineco.2004.07.002
  17. [17] Andrade, S. C., Bernile, G., & Hood III, F. M. (2014). SOX, corporate transparency, and the cost of debt. Journal of banking & finance, 38, 145–165. https://doi.org/10.1016/j.jbankfin.2013.10.001
  18. [18] Subramaniam, V., Tang, T. T., Yue, H., & Zhou, X. (2011). Firm structure and corporate cash holdings. Journal of corporate finance, 17(3), 759–773. https://doi.org/10.1016/j.jcorpfin.2010.06.002
  19. [19] Fecht, F., Füss, R., & Rindler, P. B. (2014). Corporate transparency and bond liquidity. University of st. gallen, school of finance working paper, (4), 1-50. https://dx.doi.org/10.2139/ssrn.2406820
  20. [20] Zaman, R., Arslan, M., & Siddiqui, M. A. (2014). Corporate governance and firm performance: The role of transparency & disclosure in banking sector of Pakistan. International letters of social and humanistic sciences, 43, 152–166.
  21. [21] Kordestani, G., & Alavi, M. (2010). The impact of accounting earnings transparency on the expenses of ordinary share capital. Stock exchange quarterly, 3(12), 43-61. (In Persian). https://www.sid.ir/paper/460309/fa
  22. [22] Khoshkar, F., Fazli, I., & Lashgari, A. (2019). The relationship between financial ratios of profitability and bankruptcy prediction in companies listed on the Tehran Stock Exchange. New research approaches in management and accounting, 2(23), 1-21. (In Persian). https://ensani.ir/fa/article/415640/
  23. [23] Abor, J. (2007). Debt policy and performance of SMEs: Evidence from ghanaian and south African firms. The journal of risk finance, 8(4), 364–379. https://doi.org/10.1108/15265940710777315
  24. [24] Seyed Nezhad Fahim, S. R., & Zamani, S. (2020). The effect of audit quality on the audit adjustments to earnings. Innovation management and operational strategies, 1(2), 140-156. (In Persian). https://doi.org/10.22105/imos.2021.270824.1025
  25. [25] Sayadmanesh, S., & Sadeghi, Z. (2023). Earnings quality and financial flexibility: the moderating role of corporate governance in Iran’s capital market. Financial and banking strategic studies, 1(2), 106-116. (In Persisn). https://doi.org/10.22105/fbs.2023.180157
  26. [26] Khalilian, B. (2023). Lack of financial reporting transparency, audit quality, risk of stock fall. Financial and banking strategic studies, 1(2), 93-105. (In Persian). https://doi.org/10.22105/fbs.2023.178953

Published

2024-12-27

Issue

Vol. 1 No. 4 (2024): Accounting and Auditing with Applications

Section

Articles

License

Copyright (c) 2024 Accounting and Auditing with Applications

Creative Commons License

This work is licensed under a Creative Commons Attribution 4.0 International License.

How to Cite

Khodadadi, M. . (2024). Accounting Earning Transparency and Capital Structure. Accounting and Auditing With Applications , 1(4), 215-223. https://doi.org/10.22105/aaa.v1i4.52

Similar Articles

1-10 of 25

You may also start an advanced similarity search for this article.