Evaluation of factors affecting the timeliness of financial reports of companies admitted to the Tehran Stock Exchange

Dissertation for Masters in Accounting

Abstract

Financial reporting is provided to meet the needs of decision makers. Accordingly, timeliness is recognized as one of the characteristics of information in financial reporting. Timeliness is of vital importance for capital markets and is considered as one of the main components of an efficient capital market. Timely release of information reduces information asymmetry, secret exchanges, rumors and information leakage in the market. To achieve this goal, financial reports must be available for timely information to decision makers. The purpose of this research is to evaluate and rank and determine the importance of factors affecting the timeliness of financial statements, which in this research include market value, liquidity ratio, asset management, debt management, financial leverage, company size and profitability.

For the purpose of research, the financial statements of 113 companies admitted to the Tehran Stock Exchange during the fiscal year 1381 to 1391, which were selected using a simple random sampling of 80 companies, have been evaluated. In this research, the descriptive statistics method was used to classify and interpret the data in the table, and then the normality of the distribution of the variables was tested by using the Kolmogorov-Smirnov and Shapiro-Wilk tests. and the results showed that the data are normal. Then factor analysis test and Friedman's ranking test were used to evaluate and rank the factors affecting timeliness. The results showed that all the variables have a positive effect on the timeliness of the financial statements, and only the market value has a negative effect, the liquidity ratio was recognized as the most influential factor and the importance degree of the effective factor, and the market value was recognized as the least influential and important factor.

Keywords: timeliness, market value, liquidity ratio, asset management, debt management, company size, profitability, factor analysis

Chapter one

General research

Thesis chapters

The first chapter of general research

1-1 Introduction

Timeliness is one of the features of the relevance of information and it means that financial information is available to users when they have the opportunity to make a decision, judge and act on the matter in question. In other words, financial information should be provided to users more than the time that users can process and make decisions based on that information.

From there Financial information is very sensitive to the passage of time and sometimes lose its value and usefulness in decision-making over time. Therefore, the closer the information is to the date of occurrence of the relevant events, the more timely the information will be. An example of this in financial reporting is the closeness of the reporting time to the end of the financial period.

The members of the committee that compiled accounting standards in Sar Tasar Jahan determined that timeliness is one of the most important qualitative characteristics of financial information disclosed by organizations. It has been agreed that accounting information must have the necessary qualitative characteristics of completeness, reliability, relevance and comparability in order to be useful. A major part of the relevance of information depends on its timeliness. No matter how complete, comparable and reliable the information is, it is useless for all types of economic agents if it is disclosed late for decision making. Considering the importance of this issue, the International Accounting Standards Committee (IASC) has included timeliness among It included important characteristics of financial information in its reports in 1989. With the fact that it takes time to provide reliable information, here comes a choice between timeliness and reliability. Securities laws and regulations in most countries are aware of this issue, given that they impose time limits on the release of financial information by public companies, but provide companies with sufficient time to provide reliable information. Despite the importance placed on timeliness by both standard setters and securities regulators around the world, here Little research has been done on this characteristic..

One of the most important parts of conducting any research is to present a suitable research plan (general). In this chapter, an attempt has been made to present a plan of the study by stating the different parts of the study. For this purpose, considering that the timeliness of the financial report has been given a lot of attention in the financial markets, in this study, it is ranked and determined its importance.

1-2 Description and statement of the problem

    The basis for the decision making of investors in the capital market is the information that is published by the companies in the capital market in specified time periods, but this information is only fruitful if it is reported at the right time. In other words, financial and economic decisions of users of financial reports are significantly influenced by the time value of information. The value of information decreases with increasing delay in the release of financial reports. At the end of the financial period, investors are in dire need of information so that they can predict and make decisions about their investments. The usefulness, effectiveness and validity of the information available to users depends on the speed of financial reporting (Joshi 2005). Timeliness is of vital importance for capital markets and is considered as one of the main components of an efficient capital market. The speed of reporting, in the sense of the amount of time delay in the presentation of financial reports of companies, should be of special attention to the preparers of financial reports. The usefulness of financial statements is lost if they are not ready within a reasonable period after the date of the report. A company should be in a position to disclose its financial statements on time.  The timeliness of financial reports is one of the most important elements of the quality of providing financial information of companies, because it is the timeliness of information that can lead to better and more useful use of the information that the final product of the accounting system conveys. Therefore, in this research, the relationship between the timeliness of the company's financial reports and variables related to accounting ratios in Tehran Stock Exchange is discussed. So, the main question of the research is: What factors affect the timeliness of financial reporting in companies listed on the Tehran Stock Exchange, and what is the order and importance of each factor? 3-1 Necessity of conducting research Timely release of information reduces information asymmetry, secret exchanges, rumors, and information leakage in the market, and the evaluation and pricing of securities attracts capital and maintains the confidence of investors in the markets. Capital helps, on the other hand, not having access to accurate and timely information causes market inefficiency, increasing uncertainty in decision-making and reducing the relevance of financial reports and their information content. Delays in the release of financial information can lead to problems in the pricing of securities and injustice among investors who do not have equal access to important information. Before they can enact an effective law to reduce the reporting time gap, the legislators must find out the main reasons for this problem. Therefore, we decided to determine the factors affecting the timeliness of financial statements in this research.

In this research, an effort has been made to identify effective factors and determine their degree of importance in the timeliness of financial reports to help the preparers of financial statements so that by considering these factors, they can present their financial reports to the users on time. factor analysis has not been done in the companies admitted to the Tehran Stock Exchange.

It should be noted that all the researches conducted on the factors affecting the speed of financial reporting have been tested using regression and correlation, and in this thesis, for the first time, we will identify and categorize and finally comprehensively prioritize the factors affecting the speed of financial reporting through the Friedman ranking model in the companies admitted to the Tehran Stock Exchange. It is done for the first time in this research.