Investigating the Impact of Financial Reporting Quality on Cash Flow Confidence in the Iranian Capital Market

Cash is an important and vital resource of any economic unit. From an intra-organizational perspective, the ability to predict the outcome of future activities, especially cash flows, enables the management of affairs in its most efficient form and leads to optimal operational decisions, investment and financing. On the other hand, many decisions of external users are based on information about future cash flows. The main purpose of this study is to determine the effect of financial reporting quality on cash flow confidence indicators. The statistical sample of this research is the companies listed on the Tehran Stock Exchange and the data includes 149 companies from 2008 to 2019. The research method is correlational and post-event and the method of hypothesis testing is correlation and regression testing. To calculate the quality of financial reporting, two models of McNichols and Stuben (2008) and McNecells (2002) have been used. Findings showed that in the above two models, the quality of financial reporting has a positive effect on matched cash flows, a negative effect on the ambiguity of operating cash flows and long-term fluctuations in cash flow. Also, the quality of financial reporting does not have a significant effect on the lack of cash flow and short-term fluctuations in cash flow. Finally, it can be said that as the quality of financial reporting increases, the reliability of cash flows increases.