The role of financial reporting quality in mitigating the constraining effect of dividend on firms' investment

Document Type : Research Paper

Authors

1 Ph.D. Student, Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran

2 Assistant Prof., Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran

Abstract

The current study aims to examine the role of financial reporting quality in mitigating the constraining effect of dividend on firms' investment of listed companies in Tehran Stock Exchange in their life cycle stages. In this regard, 110 firms were selected as the research sample for the period of 2006-2011. The panel data model is used to test the hypothesis. The results show that higher quality financial reporting mitigated the constraining (negative) effect of dividends on firms' investment. Companies were divided into growth, maturity and decline stages with Park and Chen (2006) model and the results show that higher quality financial reporting mitigated the constraining (negative) effect of dividends on firms' investment in maturity stage. However, no effect was observed on relationship between dividend and firms' investment in growth and decline stage.

Keywords

References

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