Corporate Characteristics and Aggressive Financial Reporting

Document Type : Research Paper


Ph.D., Department of Accounting, Faculty of Social Sciences, International Imam Khomeini University, Qazvin, Iran.


Objective: Aggressive financial reporting is the opposite of conservative financial reporting, which means using a low degree of conservatism in preparing financial statements. Some firms are currently involved in aggressive financial reporting to conceal their adverse conditions such that they release good news, yet withhold bad news; thereby an unreal image is shown. As the release of bad news runs the risk of corporate information users including creditors and shareholders' sustaining considerable damage. The purpose of this survey, which was conducted by survey method, is to study Corporate characteristics influencing the Aggressive financial reporting.
Methods: In order to achieve the above goal, the indicators of this type of reports and factors influencing were prepared by conducting interviews with experts in the accounting and auditing profession and then testing it through a questionnaire. The validity of the indicators and factors influencing was examined through structural equation modeling.
Results: Findings showed that the Corporate characteristics (corporate operational characteristic and corporate governance characteristic) are effective on Aggressive financial reporting and obtained indicators (the existence of Misstatement, unresolved Misstatement in different years, lack of provisions, negative annual adjustments, Unusual changes in sales, Fraud, CEO Changes, executive compensation, Production of non-essential goods and Monopoly firms) and factors influencing (consolidated company, Economic Conditions, Firm size, personal characteristics and attributes of manager, Political Connection, auditing Risk, auditor characteristics, board of directors financial literacy) have sufficient validity.
Conclusion: The final pattern also has a good fit.


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