Document Type : Research Paper
Abstract
According to the Political Economy Theory, Economic and political structures can to affect managers, auditors and investors behavior in the face of the financial reporting. One of the best examples of political and macroeconomic actions in recent years is the economic sanctions against Iran.Companies in Tehran Stock Exchange also inevitably have influenced by the pressures of economic sanctions against Iran. The purpose of this paper is to determine the effect of economic sanctions on the value relevance of financial statements. The data have been analyzed using a sample of 165 listed firms in the Tehran Stock Exchange during from 2001 to 2014 and panel data regression models. The results show that the value relevance of net income and book value of equity reduced in the period of economic sanctions. In addition, the value relevance of financial statements in the Destress firms has affected by economic sanctions more than other companies.
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