Comparative study of financial information reliability based on life cycle theory

Based on competing and signaling theories, companies have different characteristics and conditions in their various stages of their life cycle, which may have an impact on their financial reporting. Therfore, the purpose of this study is to investigate the effect of reliability of financial information on different company’ life cycles. In order to verify the reliability of financial information based on the conceptual framework of financial reporting, two components of faithfull represatation and information neutrality have been used. Hence, in order to measure these two components, the earnings management index as an information’ relaiability’ decreasing factor in reverse and two of the criteria are based on the reported profits in curent and last year. The reported EPS of previous and current periods are inversely used to assess the neutrality.The sample consists of 127 Tehran Stock Exchange companies during the period of 2012- 2017. In order to examine the hypotheses of the research, analysis of variance was used to compare the mean of variables using the least significant difference (LSD) and SPSS software. Research findings suggest that there is no significant difference in faithfull represatation during corporate different life cycles. Also, the results of research indicate that the impartiality of the information neutrality presented and maturity and decline stage do not differ significantly. While the neutrality of the information presented in the growth stage is significantly different with the maturity and decline stages. Based on the results, it can be concluded that the policies for the use of financial information do not differ during the life of the companies. Also, the results of this study are in accordance with the signaling theory.