The Relationship Between Monetary Policies and Information Asymmetry: Emphasizing the Role of Financial Reporting Quality

Khodabakhsh, Mohsen; Asiaie, Mohamadreza; Mahmoudi, Mahdi

doi:10.22054/fiba.2023.74363.1000

The Relationship Between Monetary Policies and Information Asymmetry: Emphasizing the Role of Financial Reporting Quality

Authors

mohsen khodabakhsh ¹

mohamadreza asiaie ²

mahdi mahmoudi ³

¹ PhD Student in Financial Law, Stock Exchange Organization, Tehran, Iran

² MSc in Accounting, Member of IACPA, Mashhad, Iran

³ PhD Candidate in Finance, Khavarmianeh financial group, Tehran, Iran.

https://doi.org/10.22054/fiba.2023.74363.1000

Abstract

A topic of recent monetary and financial research is how the capital market reacts to the central bank''s monetary policies. In particular, the question is how the response of the companies active in the economy to the change in access to external financial resources (for example, financing from the debt market) will be as a result of the change in monetary policies, And how does the quality of financial reporting play a role in this? thus, we investigated, the impact of monetary policies on information asymmetry, emphasizing the role of financial reporting quality. To measure monetary policies, information asymmetry and quality of financial reporting, indicators of liquidity volume, a price difference of stock buy and sale, and optional accrual items used respectively. Using a sample of 119 companies admitted to the Tehran Stock Exchange during the period between 2013 to 2022 shows that contractionary monetary policies lead to an increase in information asymmetry and the quality of financial reporting intensifies this relationship.

Keywords

Monetary policies

information asymmetry

quality of financial reporting

volume of liquidity

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