Financial statements comparability and the likelihood of fraudulent reporting

Fraudulent financial reporting which is characterized as the intentional elimination or distortion of information by CEOs to mask their fraudulent performance, is counted a serious corporate crime. Therefore, various studies have been conducted to investigate the various factors influencing the likelihood of fraudulent reporting. In the same vein, the present study, focusing on an aspect of the financial reporting environment, aims at scrutinizing the association between financial statement comparability and the likelihood of corporate fraudulent financial reporting. For this purpose, De Franco et al. (2011) model was used to measure the comparability of financial statements and the approach offered by Ribar et al. (2014) and Rahrovi Dastjerdi et al (2018), based on audit fees is to measure the likelihood of reporting fraudulent. The research hypothesis was also studied by using a sample of 89 companies listed on the Tehran Stock Exchange during the years 2013-2017, and then tested using a fixed logistic regression method and panel data. The results of the research reveal that financial statements comparability mitigates the likelihood of corporate fraudulent reporting. Based on the findings of the research, it can be concluded that financial statements comparability can increase the transparency and comprehensibility of financial reports, reducing the managers' opportunistic behavior and the likelihood of fraudulent reporting.