The impact of corporate governance components on the tone and readability of financial reporting

Financial reporting tone and readability are dimensions of reporting quality. This study examines the effects of corporate governance components on the tone and readability of financial reporting among firms listed on the Tehran Stock Exchange. The sample comprises ۱۲۵ firms observed over ۲۰۱۹–۲۰۲۵, yielding ۸۷۵ firm-year observations in a panel. Tone was measured using dictionary-based analysis, and readability was measured using the negative Fog Index. Chow and Hausman tests supported fixed-effects panel estimation, while the Breusch–Pagan test indicated heteroscedasticity; therefore, models were re-estimated using generalized least squares. The results show that managerial ownership and family ownership are negatively and significantly associated with both reporting tone and readability. Institutional ownership is positively and significantly associated with reporting tone but has no significant association with readability. Board independence and audit committee independence are positively and significantly associated with both tone and readability. Audit committee meeting frequency is positively and significantly associated with readability but is not significantly associated with tone. Board size, board gender diversity, and audit committee size are not significantly associated with either outcome. The models explain ۶۲.۵% and ۷۳.۹% of the variation in tone and readability, respectively. The findings highlight the importance of ownership and oversight mechanisms in reporting.

کلیدواژه ها:

Corporate Governance ، Financial reporting tone ، Financial Reporting Readability ، Impression Management ، Information Asymmetry