أثر جودة المراجعة الخارجية على العلاقة بين مقروئية التقارير المالية السنوية وتكاليف الوكالة: دراسة إمبريقية على بيئة الأعمال المصرية

Abstract EN

The current study answered two questions: first, is there a relationship between readability of annual financial reports of listed companies in the Egyptian stock market and agency costs? as for the second, does external audit quality affect the relationship between readability of annual financial reports of listed companies in the Egyptian stock market and agency costs? the study sample is a random sample of listed companies in the Egyptian stock market after excluding banks, financial companies and insurance companies due to their special nature.

the sample is represented by 110 listed companies in the Egyptian stock market for the period from 2015 to 2019.

the two dependent variables represent agency costs between shareholders and managers, and agency costs between majority and minority shareholders.

the two independent variables are length of annual financial report, size of annual financial report file, and the regulating variable is external audit quality (BIG4).

on the one hand, the first hypothesis of the study was accepted, which states: “it is expected that there is a negative relationship between readability of annual reports and agency costs,” but this result is restricted when annual reports readability measure is length of the financial report and also when agency costs measure is of the second type, which is agency costs between majority and minority shareholders.

on the other hand, the second hypothesis of the study was accepted, which states: "external audit quality is expected to affect the negative relationship between the readability of annual reports and agency costs." but this result is restricted when annual reports readability measure is length of the financial report and also when agency costs measure is of the first type, which is agency costs between shareholders and managers.

in general, these results indicate a negative and significant relationship between the readability of annual report and agency costs for listed Egyptian companies and also this negative relationship is present in listed Egyptian companies that have a higher quality of external audit.

clear disclosure has become an important reform trend when disclosing information in financial markets around the world, so the results of the current study have implications for this reform and provide insights for regulators and professionals in the business environment.

the study provides important insights into the impact of less- readability annual reports on stock market participants.

in light of the recent interest of regulators in corporate governance in the Egyptian business environment and the availability of a huge amount of information about the company, the importance of studying readability of the annual reports, especially those listed in the Egyptian stock market, due to the increasing interest it receives on the part of many users.