Accounting and Auditing Research

Accounting and Auditing Research

The Effect of CEO Power on Financial Reporting Readability: The Moderating Role of Financial Reporting Quality and CEO tenure

Document Type : Original Article

Authors
1 1. Ph.D. Candidate of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran
2 2. Associate Professor of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran
3 3. Assistant Professor of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan, Isfahan, Iran
10.22034/iaar.2025.508689.1823
Abstract
The readability of financial reporting as a factor affecting the credibility of financial statements and investment decisions of companies has been one of the topics of interest in financial literature in recent years. The CEO can use his power to hide his bad performance, especially in the early years of his career, by making the financial statements difficult to understand. Therefore, the purpose of this study is to investigate the effect of the CEO's power on the readability of financial reporting, considering the moderating role of the quality of financial reporting and the CEO's tenure. The statistical the population of this study are all companies listed in Tehran Stock Market, in which 100 companies in the period 2013 to 2024 have been selected by systematic elimination method. For data analysis and hypothesis testing, multivariate regression model based on compound data regression is used. The results of the first hypothesis test showed that the CEO's power has a negative effect on the readability of financial reporting. In addition, the results of the second hypothesis showed that with the increase in the quality of financial reporting, the influence of the CEO's power on the readability of financial reporting weakens. Finally, the findings of the third hypothesis showed that the CEO's tenure does not affect the relationship between the readability of financial reporting and the power of the CEO.
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Articles in Press, Accepted Manuscript
Available Online from 13 October 2025