Competition in the product market, CEO's power and readability of financial reports

Articles in Press

Document Type : Original Article

Authors

1 Professor of Accounting, Faculty of Commerce and Finance, University of Tehran, Tehran, Iran.

2 MSc. of Accounting, KAR Higher Education Institute, Qazvin, Iran.

3 MSc. of Accounting, Shiraz University, Shiraz, Iran.

10.22108/far.2024.141043.2042

Abstract

Product market conditions are an important factor that affects the balance of benefits and costs of CEO power. On the one hand, competition in the product market, as an external mechanism of corporate governance, can reduce the possibility that the management will use its power for opportunistic behavior and affect the readability of the company's financial reports. On the other hand, increasing the cost of disclosing information in competitive market conditions, maintaining a competitive position and personal interests may create incentives for powerful managers to disclose financial reports that are more complex and less readable. Therefore, the purpose of this research is to investigate the effect of competition in the product market on the relationship between the CEO's power and the readability of financial reports. Research hypotheses were tested for 105 companies admitted to the Tehran Stock Exchange between 2016 and 2022. The results show that there is a positive and significant relationship between the CEO's power and the readability of financial reporting. Also, competition in the product market has a decreasing moderating effect on the relationship between the CEO's power and the readability of financial reporting.

Keywords

Main Subjects

Financial Accounting Research

Articles in Press, Accepted Manuscript
Available Online from 14 October 2024

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History

  • Receive Date: 28 May 2024
  • Revise Date: 14 October 2024
  • Accept Date: 14 October 2024

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