Examining the Effect of the Developed Investment Efficiency Model on Disclosure Tone and Financial Reporting Readability: A Study of Companies Listed on the Tehran Stock Exchange
Keywords:
Investment efficiency, disclosure tone, financial reporting readabilityAbstract
In addition to focusing on financial figures and ratios, users of information attach considerable attention to the narrative disclosures contained in financial reports, as these disclosures facilitate the interpretation of numerical information presented in the financial statements. In this context, the tone and readability of financial reporting emerge as important features, and a firm’s investment efficiency can influence both its disclosure tone and the readability of its financial reporting. The present study investigates the effect of the developed investment efficiency model on disclosure tone and financial reporting readability among companies listed on the Tehran Stock Exchange. This study is applied in nature and uses panel data. Applying a systematic elimination method, observations from 120 firms were collected for the period from 2016 to 2023, and the research hypotheses were tested using multiple regression analysis. The temporal dimension of the study is retrospective, and a deductive approach was used to interpret the findings. The results indicate that investment efficiency has a positive and significant effect on the readability of corporate financial reporting. Moreover, the findings show that investment efficiency has a negative and significant effect on firms’ disclosure tone. Therefore, based on the results of the study, improving investment efficiency can be expected to enhance the qualitative characteristics of financial reporting. Accordingly, efforts to optimize resource utilization through precise evaluation of investment efficiency can create a win–win outcome for both the firm and the users of financial reports.
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Copyright (c) 2025 Ahmed Jubair Lafta, Hosein Asgari Alouj, Mostaf Abd Alhussein Al Almansoori, Mohammad Alimoradi (Author)
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