Investigating the relationship between activity ratios and the amount of information disclosure in the financial statements of companies listed on the Tehran Stock Exchange

Dissertation for Master's Degree

Direction: Accounting

Abstract:

The main role of financial reporting is the effective transfer of information to external people in a reliable and timely manner, which is realized in the shadow of reporting transparency and quality disclosure of financial information. A review of past studies shows that the transparency and quality of disclosure of financial information of economic units has had an important impact on investors' strategies. This research examines the relationship between the amount of disclosure in the financial statements of companies listed on the Tehran Stock Exchange and common activity ratios (asset utilization indices).  

In the first step, in order to determine the amount of disclosure of financial statements, which in this research, in order to determine the value of the dependent variable, it is necessary to prepare a disclosure adequacy checklist based on Iran's accounting standards and define a disclosure score or index for each company. In the second stage, the most common activity ratios (asset utilization indices), i.e. the ratio of sales to working capital, ratio of sales to fixed assets, ratio of sales to total assets and ratio of sales to equity (specific value) were calculated and extracted. Then, in this research, cross-sectional regression analysis based on panel data has been used to investigate the relationship between the amount of disclosure in financial statements and common activity ratios in the years 1382 to 1387. The research sample includes 65 companies admitted to the Tehran Stock Exchange in a period of 5 years.

The findings show that there is generally a significant relationship between the amount of disclosure in the financial statements of the companies admitted to the Tehran Stock Exchange and common activity ratios.

Introduction:

Accounting is an information system. This information system, as a subset of management information systems, is responsible for processing financial data. Although the user of a major part of the products of this information system is the management of an economic unit, the management provides various information to users outside the economic units according to the duties and responsibilities it has towards different groups of users of financial information, as well as according to legal requirements or requests from business parties or financiers of economic units. Annual financial reports are one of the most important products of accounting information systems, which are presented in a specific framework for different groups of foreign users of financial information (Arab Mazarizdi, 1374, 58) [1].

According to the opinion of the Financial Accounting Standards Board, the decisions of investors and creditors and their use of information have a much wider scope than other foreign groups, and for this reason, their decisions have major effects on the allocation of economic resources. It is a country (American Financial Accounting Standards Board, 1978, 30)[2].

Since investors and creditors are the two main external groups of users of financial information, and the preparation and provision of related information for these two groups is one of the main missions of management and accounting systems, therefore special attention is needed to the type of information needs of these people.

Given that the users Financial reports are considered as one of the main sources of financial information about economic units as decision-making criteria, so financial reporting based on the opinion of the Financial Standards Board should provide information that is useful for investors and actual and potential creditors and other users in investment decisions and granting credit and other similar decisions (same source, 30)3. It discloses its profitability. It is obvious that the principle of disclosure, as one of the principles of accounting, expresses all the important and related facts related to the events and activities of the business unit.

The principle of disclosure requires that financial statements be prepared and presented in such a way that, in terms of the objectives of the financial statements, it is such that on the one hand it provides the possibility of making informed decisions for the users and on the other hand it does not cause them to go astray.

Researchers in the field of disclosure of financial reporting in order to measure the amount of disclosure and its impact on the decisions of investors from various types of influential factors. have taken advantage of the disclosure of financial information. The historical course of research conducted in the field of financial information disclosure shows that these factors are in four general areas, including the first area of ??the use of balance sheet variables (variables related to the volume and activity of companies) and its relationship with the adequacy of financial information disclosure, the second area, the relationship between profit and loss (functional) variables with the level of financial reporting disclosure, the third area is a combination of profit and loss variables and a balance sheet to measure the level of financial reporting disclosure of companies, and the last area is the relationship between qualitative variables and Variables other than the aforementioned variables such as the nature and type of industry, the type of auditing institution, professional and non-professional members of the board of directors, the presence or absence of institutional shareholders can be divided by the amount of financial reporting disclosure. But in this research, considering all the above-mentioned cases and in the background section of the research, it will be tried to use only the indicators of measuring the use of assets, especially the ratios of the companies' activity, to check the disclosure level of financial reporting. The existence of transparent and comparable financial information is the main pillar of accountability and informed economic decisions. Investors, creditors and other users need relevant and understandable financial information to make decisions about buying, selling and holding stocks, granting loans and other important economic decisions. Financial information and annual reporting of a profit-making unit are the most basic information that forms the basis of many investors' decisions and users' judgments. The main role of financial reporting is the effective transfer of information to external people in an authentic and timely manner, which is realized in the shadow of reporting transparency and quality disclosure of financial information. A review of past studies shows that the transparency and quality of disclosure of financial information of economic units has had an important impact on investors' strategies. 

In this research, the relationship between activity ratios and the amount of information disclosure in the financial statements of companies listed on the Tehran Stock Exchange is investigated. In this chapter of the research, an attempt has been made to present the generalities of the research, including the problem, objective, hypotheses and research method, statistical population and key words of the research. 

2-1 Study history

Before starting research, every researcher should get enough knowledge about the scientific efforts made on the subject of his research and know and use the fields, methods, perspectives, and results of the actions made.

On this basis, we have divided the said section into two categories, internal and external, and after examining the samples of research done inside the country, we will examine the issues related to research abroad.

The increase in the need of investors to use the reports provided by companies has led to the fact that since the 1960s, many researches have been conducted on the disclosure and quality of reporting. Accept that in the following, internal and external researches are mentioned. Needless to say, the research conducted in this category is about two aspects: theoretical research conducted by experts in the field of disclosure theory, which lacks empirical evidence, and practical research conducted by researchers based on data and empirical evidence of companies. At first, the research conducted abroad is addressed; In this regard, it is worth mentioning that the mentioned researches will be presented in the order of their importance and degree of relevance to the topic of the present research.

As mentioned above, the behavior of disclosing accounting information has attracted the attention of researchers at least since the 1960s. From the point of view of the current research, research related to disclosure can be divided into two groups.