Factors Affecting Unqualified Financial Reports

The financial statements accompanied by independent auditors’ unqualified report which presents to capital market are used by interested beneficiary users. According to rules and regulations of the capital market, acceptance of the companies in the stock exchange list and its continuity requires transparent financial reports free of material misstatements.
Therefore name of those companies that have adverse or disclaimer audit opinion on their financial reports will be deleted from stock exchange list resulting unfavorable consequences for the company and its beneficiary users.
In capital market of  many  countries  including  China,  in  case of qualified audit report that includes serious explanatory paragraphs affecting financial statements, the companies would have specific period of time to remove the deficiencies and  to have the opportunity to issue  corrected  (restated)  financial reports. In Iran’s capital market, issuing adjusted audit reports is more common, hence in this research we study the factors affecting desirability of financial reporting in the frame work of giving them credibility through issuance of unqualified audit report.
In this study, 143 companies listed in stock exchange are selected through a statistical process and examined for a period of seven years, and thus the factors and variables affecting the companies’ financial reporting are determined in the capital market.
The  research  findings  show  that  during  the  period  under  review the financial  reporting have  improved  and benefited  a favorable trend  in  the  capital  market.