Factors influencing the quality of financial information: A systematic literature review

Abstract

Purpose: This research seeks to identify the key factors influencing the quality of financial information within the context of globalisation and complex commercial transactions.

Motivation: In today's globalised environment, trust in financial information is crucial for maintaining market stability and efficiency. Understanding these influencing factors is paramount for sound decision-making by firm managers.

Design/Methodology/Approach: A Systematic Literature Review methodology is employed. The investigation examines 50 articles from the SCOPUS and Web of Science databases to identify the key determinants affecting financial information quality.

Main findings: The investigation identifies critical factors at firm, country and international levels. Firm-level factors include corporate governance practices, incentives for transparent disclosure and bank monitoring. Country-level influences stem from regulatory frameworks and firm-agent dynamics. Finally, international factors involve competition within capital markets and the degree of a firm's internationalisation.

Practical implications: The research provides key recommendations for both firm managers and regulatory bodies. Managers are advised to adopt transparent policies, implement rigorous audit processes and foster a culture of integrity and accuracy. Additionally, strengthening regulatory bodies and supervisory entities is crucial for effectively monitoring financial practices and penalising misconduct.

Novelty/Contribution: This research represents a pioneering effort to systematically synthesise factors affecting financial information quality. It provides a comprehensive framework for academics and practitioners, promoting sustainable economic growth and informed decision-making.

Keywords:

• quality of financial information
• financial statements
• earnings management
• corporate responsibility
• systematic literature review
• disclosure quality

Disclosure statement

No potential conflict of interest was reported by the authors.