حسابداری سلامت (Sep 2015)
The Effect of Managers' Ability on the Relationship between the Quality of Financial Reporting and the Efficiency of Investment in the Pharmaceutical Companies Listed on the Tehran Stock Exchange
Abstract
Introduction: The quality of financial reports is measured by accruals, and these accruals can be manipulated by managers. Therefore, managers by manipulating the accruals can affect the quality of financial reports. In this research, a new non-financial element has been considered as manager's ability, and its goal is to investigate the effect of manager's ability on the relationship between the quality of financial reporting and the efficiency of investment in the pharmaceutical companies listed on the Tehran Stock Exchange. Method: This is an analytical descriptive research in terms of purpose and it is an applied research regarding the results. The sample of the research includes 24 active companies in the pharmaceutical industry from 2006 to 2014. In order to fit the model of the research, the Ordinary Least Squares and Multi-variables Regression have been used, and the data are of the panel type. Moreover, in order to do the calculations, DEA Frontier Software Version 4.1 and Eviews Version 9 have been applied. Results: The results derived from testing the research hypothesis showed that managers' ability does not influence the relationship between the quality of financial reporting and the efficiency of investment. Conclusion: The findings of the current research suggest that managers' ability does not influence on the relationship between the quality of financial reporting and the efficiency of investment. This result in Iran's market is justifiable because of the inefficiency of the capital market and instability of economic conditions since at the time of inefficiency of the capital market, the discussion of the asymmetry of information is put forward, but the information asymmetry does not cause the financing costs to rise because of managers' hiding the real information from the public opinion. So, the managers of the pharmaceutical companies do not have much difficulty for providing the financing cost, and they do not believe in increasing the transparency and quality of their reports; hence, in this relationship, the managers' ability does not have any effect.
