Investigating the impact of financial report readability on financing policy with an emphasis on the role of corporate governance in companies listed on the Tehran Stock Exchange.

Report readability is an important tool for effective communication between companies and users of company information. Considering the importance of the readability of the report and its financial consequences, this research has been conducted with the aim of investigating the impact of the readability of the financial report on the financing policy, emphasizing the role of corporate governance in companies admitted to the Tehran Stock Exchange. The research sample includes the data of 142 companies admitted to the Tehran Stock Exchange, in the period from 2009 to 2018. Multivariable regression models with panel data have been used to test the research hypotheses. To measure the readability, two indices of fugue and text length were used, and to measure the quality of corporate governance, the model of Jabarzadeh Kongerloi et al. (2013) was used. The obtained results show that the readability of the financial report has a significant direct relationship with business credit and a significant negative relationship with cash retention. In other words, companies with more readable financial reports receive more business credit from suppliers. And they keep less cash. Additional analysis shows that strong corporate governance quality moderates and strengthens the positive relationship between liquidity and business credit, as well as the negative relationship between liquidity and cash holdings.