Effect of the Complexity of Financial Reporting Standards and Level of Investment Income on the Investor Sentiments (Case study: The Tehran Stock Exchange market)

Abstract

This research measures the complexity of the financial reporting standard and the factors affecting the investor's sense of security in making investment decisions with less risk in the Tehran Stock Exchange. It is an applied and quantitative research and a descriptive survey. Thus, 106 companies were selected and investigated empirically. Theoretically, it supposes that the amount of investors' sentiments to use financial information will increase or decrease with an increase in the complexity of the financial reporting standard. As the empirical findings show, there is a significant and inverse relationship between the complexity of the financial reporting standard and the investor sentiments in making decisions at a certain level of income and the said sentiments are higher for companies that have more non-professional investors. These findings can be practical from the point of view of protecting the amount of income requested for investors, especially for investors and observers of capital markets.

Keywords: complexity measurement, financial reporting, income level, investor sentiments