The Effect of Financial Statement Comparability on Accounting Earnings Relevance considering the role of Earnings Smoothing

Saeid Anvar Khatibi¹ Mohammad Zare²

1) Assistant Professor, Department of Accounting, Tabriz Branch, Islamic Azad University, Tabriz, Iran
2) MSc, Department of Accounting, Siraj Institute of Higher Education, Tabriz, Iran

Publication : National Conference on intelligent accounting: data analysis in financial processes(bonabaccuconf.ir)
Abstract :
The financial statements comparability can improve the assessment of a company s performance over time and facilitate the identification of real financial changes. The comparability of financial statements also strengthens the trust of investors and stakeholders by increasing the transparency of financial reporting and leads to more accurate judgments by auditors and economic decision-makers. The sample of the study includes 148 companies listed on the Tehran Stock Exchange. The time scope of the research includes a seven-year period based on the financial statements from 2018 to 2025. In this study, the Di Franco model (2011) is used to measure the comparability of financial statements, and the Olsen (1995) and Stone and Harris (1991) models are used to measure the relevance of accounting earnings, and the Eichel model (1981) is used to measure the smoothing of earnings. The research includes two hypotheses that were tested using multivariate linear regression with panel data. The test results showed that the comparability of financial statements has a negative and significant effect on the relevance of financial information according to the Olsen (1995) model. The findings also showed that in companies with high profit smoothing, the negative effect of the comparability of financial statements on the relevance of accounting profit increases in the Olsen (1991) model, but this result was not confirmed in the Stone and Harris (1991) model.
Keywords : financial statement comparability accounting earnings relevance earnings smoothing