Abstract

This study is focused on the qualitative characteristics arrangement in Iran with its special environment, to determine the weight and importance of each component of qualitative characteristics upon the perception of the three main engaged groups in financial reporting to include, professional members, users and preparers of accounting information from qualitative characteristics preferences and offering suitable rearrangement of these qualities to improve financial reporting quality and reduce the level of information asymmetry in Iran. To test the three main hypotheses of the study which were formed upon a theoretical framework, aided by a survey research, a suitable questionnaire was developed with some questions about the current qualitative characteristics condition in providing Iran’s current financial reports and the standards’ setting process and its deficiencies. Collected data were tested by Kruskal-Wallis, Post Hoc and Friedman ranking statistical methods. The results of the study revealed that respondents among seven investigated qualities were less satisfied by inadequate disclosure, insufficient consideration of cost-benefit and lack of sufficient reliability of the information. They were also relatively satisfied with the comparable, timeliness and conservative manner that was used to present information. On the other hand, while from providers’ viewpoint, lack of adequate disclosure, sufficient reliability and consideration of cost benefit constraint leads to an increase of information asymmetry, respectively, from the users’ viewpoint, not presenting timely with adequate disclosure and sufficient reliability are the main factors that reduce the level of transparency, thereby producing wide spread information asymmetry among contributors in those markets. However, professional members are complaining more of inadequate disclosure, lack of sufficient reliability and also relevance. In the end, the profession members (especially auditors), when compared to two other investigated groups, are less satisfied with the current financial reporting in accordance with those qualitative characteristics. This finding in some aspect is in accordance with the past finding by Mirshekary and Saudagaran (2005).

Key words: IASB/FASB common conceptual framework, qualitative characteristics arrangement, information asymmetry, preparers’ and users’ perception of accounting information.