To Study the Effect of Characteristics of Corporate Governance on the Quality of Financial Reporting (Evidence from Tehran Stock Exchange)

This research studies the effect of Corporate Governance on quality of financial reports of admitted companies in Tehran Stock Exchange in a 7-year period from 2006 to 2012. It is expected that establishment of appropriate Corporate Governance would prevent decrease in quality of financial reports along with making financial reporting process more controllable. In the present research we have used preciseness of prediction of future operational cash currents via operational profit elements as a measurement index from evaluation of financial reporting quality and also relation of off-duty members of board of directors, organizational investors owned share, power concentration, board of directors size, ownership structure, type of ownership, free floating share percentage, auditing quality, internal auditing, financial reporting quality and auditing period were used as Corporate Governance. A total number of 100 companies were selected as sample companies and using comparison test of average of the two societies we would analyze the results. The results achieved from the research indicated that ability index of Corporate Governance which consists of all structural specifications studied in this research is not effective on the quality of financial reporting of the companies admitted in Tehran Stock Exchange. Also in studying the effect of Corporate Governance individually it was observed that only quality of auditing reporting would affect the quality of financial reporting of the companies.