Document Type : Original Article


Department of Accounting, Khorasgan (Isfahan) Branch, Islamic Azad University, Isfahan, Iran


Considering the current magnificent increase in the incidence of the restatements in capital market, encourage the researchers to study the causes and consequences of restatements. However, among of these factors, the role of corporate governance mechanism attracted more attention. This paper seeks to examine the relationship between of the corporate governance and the financial restatement in the companies listed in Tehran Stock Exchange (TSE). This study evaluates the effects of various independent variables on the financial restatement using a logistic regression analysis approach for 111 companies over a 10 year period (2001-2010). The results indicate that the boards of director independent and auditor tenure are negative significant with financial restatements. Also, the results show that the audit type and the change number of the boards of director are associated with financial restatements positively. However, the empirical evidence indicates that CEO change, CEO tenure, institutional ownership, and the size of the boards of director do not have significant impact on the likelihood of financial restatement. Overall, the results presented in the paper indicate that the week corporate governance can increase financial restatement and decrease financial statement quality probability.


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