An Investigation of the Relationship between Financial Reporting Quality and Information Asymmetry under Different Firm Riskiness and Investor- Interest

The present study has been investigated relationship between quality of financial reporting and information asymmetry under different firm riskiness and investor-interest. Kasznik model has been used as a measure of the quality of financial reporting and two alternative proxies have been used for information asymmetry: bid–ask spread (spread) and trading volume (volume) and for firm riskiness، technology of companies. The number of buying and selling by institutional investors as representative of the investor-interests to analyze company''s reports has been considered. with consideration of limitations for companies under research، 102 organizations that had accessible audited financial statements during the years 2009 to the end of 2013 were selected as statistical sample. The results show that in regular situations، meaningful and inverse correlation exists between quality of financial reporting and the information asymmetry based on spread but meaningful correlation wasn''t found with transaction volumes. Also investor-interest and risk dosn''t affect the relationship between quality of financial reporting and asymmetric information.