A Study on the Effect of Corporate Governance on the Timeliness of Financial Reports of Listed Firms on Tehran Stock Exchange

Reza Eslami, Afshin Armin, Hamid Rostami Jaz

Abstract


Financial reporting timeliness is considered as one of the important qualitative characteristics of financial reporting objectives, the effectiveness of accounting information and significant mechanism to minimize the transaction, based on tips and rumors in the capital markets. The presence of corporate governance structure can lead to improve the management role and minimize the occurrence of management misbehavior, reduce wrong reporting and financial reporting lag. Therefore, the aim of this study is to investigate the relationship between internal corporate governance (including Board independence, Board size, CEO duality, Board expertise and Board diligence) and timeliness of financial reports of listed firms in Tehran Stock Exchange. The sample of the study consists of 90 firms listed in Tehran Stock Exchange in the 5-year period from 2010 to 2014. To verify the hypotheses, multiple regression analysis has been used. The results of the hypotheses testing indicate that there is no significant relationship between Board independence, Board expertise and Board diligence and the possibility of fraudulent financial reporting in the firms. However, there is a significant correlation between Board of Directors size and financial reporting timeliness (audit and management reports lag) in the firms.

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