The Impact of Financial Reporting Quality on Investment Decisions: Evidence from Tehran Stock Exchange

Abstract

This study investigates the profound impact of financial reporting quality (FRQ) on corporate investment decisions within the context of the Tehran Stock Exchange (TSE). Financial reporting serves as a critical mechanism for reducing information asymmetry between corporate managers and external investors, fostering better resource allocation and promoting sustainable economic growth. By analyzing data from 112 publicly listed companies over a five-year period (2018–2022), this study employs multivariate regression techniques to explore the relationship between FRQ and investment decisions. Results reveal that higher FRQ significantly enhances corporate investment by providing investors with reliable and timely information. These findings are particularly relevant for emerging markets like Iran, where regulatory inconsistencies often impede financial transparency.