Audit Committee Attributes and Readability of Financial Statement Footnotes

This study aimed to investigate the relationship between audit committee attributes and readability of financial statement footnotes of companies listed in the Iranian Stock Exchange. This study's statistical population included all companies listed on the Tehran Stock Exchange over seven years from 2012 to 2018. A systematic elimination method has been used for sampling. Multivariate regression and Eviews software were used to test the research models. The results showed a significant relationship between the audit committee's independence and the readability of financial statement footnotes. There was also a significant relationship between the number of audit committee meetings and the readability of financial statement footnotes. However, there was no significant relationship between the audit committee's financial expertise and financial statement footnotes' readability. Companies with less readable financial statements are more likely to commit fraud than other companies. Financial reporting's readability plays an important role in enhancing the predictability of fraud in the financial statement. By using sophisticated and lengthy disclosures, managers keep some of their intended information secrets from investors and other stakeholders to avoid disclosing information about their bad news or performance. This study's results can be applicable for shareholders and investors; securities exchange, universities and research institutes, suppliers of goods and services, and the government. There have also been very limited efforts, especially in Iran, to investigate the relationship between audit committee attributes and readability of financial statement footnotes, so we address this topic in the present study.