Financial Information Reliability and Agency Costs: Evidence from Tehran Stock Exchange

The main purpose of this study is to empirically examine the relationship between financial information reliability and agency costs for listed companies in the Tehran Stock Exchange (TSE). Therefore in this study a sample of 106 listed companies in the TSE between 2010 to 2017 were investigated. Efficiency ratios (operating expenses to sales ratio and assets turnover ratio) are selected as agency costs proxies. Also, financial restatement occurrence and magnitude of financial restatement are employed as adverse measures of financial information reliability. For attaining the purpose of the study, two main hypotheses were proposed. To test these hypotheses multiple linear regression analysis in panel data mode were conducted. The main findings indicate that there isn’t relationship between financial restatement incidence and agency costs proxies. Also magnitude of financial restatement don’t related to agency costs measures. Therefore, it’s concluded that financial information reliability has no impact on agency costs of examined Iranian firms.