The Influence of Ownership of Investment Company on Financial Reporting Quality: A Test of Efficient Monitoring Hypothesis

In the economic environment of the country, government-affiliated organizations and companies, acquire the ownership of many joint stock companies in the stock exchange by creating investment companies. The increasing presence of institutional and legal investors in the circle of company owners is an effect that the active presence of this group has on the way governance of organizations as well as their performance. The main purpose of this empirical research is to determine the impact of ownership of investment companies on the Financial Reporting Quality with emphasis on Efficient Monitoring theory. To measure the Financial Reporting Quality, the indicators of quality of disclosure, quality of accruals, earnings management of accruals, real earnings management and earnings management of real items have been used. The statistical population of this research is companies listed on the Tehran Stock Exchange. The data studied in this research include 1250 years-Firm from 2007 to 2018. The research method is correlational and post-event and the method of hypothesis testing is correlation and regression testing. Specific results of testing research hypotheses show that the ownership of investment companies and the concentration of ownership of investment companies have a significant effect on the Financial Reporting Quality.