African Journal of
Business Management

  • Abbreviation: Afr. J. Bus. Manage.
  • Language: English
  • ISSN: 1993-8233
  • DOI: 10.5897/AJBM
  • Start Year: 2007
  • Published Articles: 4199

Full Length Research Paper

A study of the impact of collapse on financial reporting quality of listed companies: Some Iranian evidence

Ghodratallah Talebnia1, Mahdi Salehi2* and Saeed Jabbarzade Kangarluei1
  1Department of Accounting, Islamic Azad University, Science and Research Branch, Tehran, Iran. 2Department of Accounting and Management, Islamic Azad University, Takestan Branch, Iran.
Email: [email protected]

  •  Accepted: 14 December 2010
  •  Published: 18 May 2011

Abstract

 

With respect to the importance of financial reporting quality for decision-making of investors, on one hand and recent collapse of international corporations including Enron and WorldCom and the increase of financial reporting fraud that cause concerns about the quality of financial reporting and credit accounting is wasted; therefore, in this study the impact collapse on financial reporting quality of listed companies on Tehran Stock Exchange are investigated. This study sought to answer the questions whether the collapse can affect the quality of financial reporting or not?  Therefore, the samples including 81 of collapsed companies (subject to Article 141 Business Law) in Tehran Stock Exchange during 10 years from 1999 to 2009 and to predict the collapse from Altman Model and to measure financial reporting quality from Barth Model are used.  In addition, methods of statistic test used in this study are Logit regression model.  Finally, research results indicate that collapse in three levels of latency stage, the stage of cash deficits and commercial and financial insolvency and complete collapse does not have any significant impact on the quality of financial reporting of listed collapsed companies on Tehran Stock Exchange.

 

Key words: Collapse, latency stage, the stage of cash deficits and commercial and financial insolvency and complete collapse, financial reporting quality.