The Effect of Political Relations with the Government on the Relationship between Social Responsibility and Accounting Conservatism

Document Type : Research Paper

Authors

1 Department of Accounting, Faculty of Social Sciences and Economics, Alzahra University, Tehran, Iran.

2 Ph.D. Student of Accounting, University of Mazandaran, Babolsar, Iran.

3 MSc. of Accounting, Farabi Campus of University of Tehran, Qom, Iran

4 MSc. of Accounting, KAR Higher Education Institute, Department of Management and Accounting, Qazvin, Iran.

Abstract

The main purpose of this study is to investigate the effect of political relations with the government on the relationship between social responsibility and accounting conservatism in companies listed on the Tehran Stock Exchange. The research hypotheses were tested based on a statistical sample consisting of 124 companies over the period from 2014 to 2020 using multivariate regression patterns and panel data set. The results show that social responsibility has a positive and significant effect on accounting conservatism. Also, political relations with the government have a negative and significant effect on the relationship between social responsibility and accounting conservatism. The results indicate that in the relation-based economic systems, political relations are an important source of value for companies with these relations. Companies with political relations can easily access capital resources and other benefits through their relations, which makes them less dependent on high-quality financial reporting. Therefore, social responsibility in companies with political relations with the government neither changes the behavior of managers in connection with the low-quality reporting of financial information nor improves the quality of information. It also leads to neglect of reported financial information. Hence the quality of financial information decreases in terms of predictive value and earnings conservatism

Keywords

References

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History

  • Receive Date: 27 November 2021
  • Revise Date: 20 February 2022
  • Accept Date: 27 February 2022

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