Financial Reporting Quality of Tehran Stock Exchange Listed Companies during Global Financial Crisis

The global financial crisis, which began in September 2008, severely shook investors` confidence, affected corporate earnings and stock market performance, and caused the failure of many firms around the world. According to the research, this crisis has affected Iran`s capital market as well however with delay. In the crisis situation, managers are aware of the effect of financial reporting on users` decisions. This effect raises a question whether crisis conditions cause strong motivation for managers to promote reporting quality in order to gain investors` confidence or managers try to manipulate their earnings and performance to prevent negative market reactions and decreasing rewards. In this regard, and according to assumptions about management motivation for promoting financial reporting quality during the crisis, two main hypotheses were proposed which have been tested for sample of listed companies in Tehran stock exchange during years of 1387 to 1394. Findings show that financial reporting quality of Tehran stock exchange listed companies in global financial crisis was higher than the usual condition and firms with higher needs of finance had higher financial reporting quality. Innovative contribution of present research is the investigating of the effect of unfavorable economic condition on firms reporting strategy and anticipating reporting behavior during specific situations such as financial crisis.