The Role of Dual Holders in Enhancing Information Transparency: An Analysis of Their Impact on Accounting Information Disclosure with Emphasis on the Moderating Role of Corporate Governance

Reza Majidi; Meysam Foroghi Abari; Zohreh Zivdar

Authors

Reza Majidi Department of Accounting, Mo.C., Islamic Azad University, Mobarakeh, Iran Author https://orcid.org/0009-0000-8705-5503
Meysam Foroghi Abari Department of Accounting, Mo.C., Islamic Azad University, Mobarakeh, Iran https://orcid.org/0000-0002-8489-0551
Zohreh Zivdar Department of Accounting, Dol.C., Islamic Azad University, Isfahan, Iran Author https://orcid.org/0000-0003-4525-3661

Keywords:

dual holders, accounting information disclosure, corporate governance, information transparency, Tehran Stock Exchange

Abstract

The purpose of this study is to examine the effect of dual holders on accounting information disclosure, with particular emphasis on the moderating role of corporate governance monitoring mechanisms. Accounting information disclosure, as one of the most important mechanisms for reducing information asymmetry and enhancing capital market transparency, plays a critical role in investors’ decision-making. In this context, dual holders—investors who simultaneously hold both the equity and debt of a firm—may exert a substantial influence on corporate disclosure policies because of their access to private information and their enhanced influence over management. The statistical population of the study consisted of 105 companies listed on the Tehran Stock Exchange during the period 2015–2023. The data were analyzed using panel-data techniques and multivariate regression models. The findings indicate that dual holders have a positive and significant effect on accounting information disclosure; specifically, as the ownership concentration of dual holders increases, the quality of information disclosure improves. The results further demonstrate that corporate governance monitoring mechanisms significantly strengthen the positive effect of dual holders on information disclosure. These findings suggest that, when accompanied by an effective corporate governance system, dual holders can function as a complementary monitoring mechanism that enhances corporate information transparency and reduces information asymmetry. Based on the findings, it is recommended that capital market policymakers strengthen corporate governance mechanisms and improve the transparency of ownership structures in order to facilitate more effective utilization of the monitoring capacity of dual holders.

References

[1] S. H. Penman, "The Quality of Financial Statements: Perspectives from the Recent Stock Market Bubble," Accounting Horizons, vol. 17, no. Supplement, pp. 77-96, 2003, doi: 10.2308/acch.2003.17.s-1.77.

[2] S. Heitzman, C. Wasley, and J. Zimmerman, "The Joint Effects of Materiality Thresholds and Voluntary Disclosure Incentives on Firms' Disclosure Decisions," Journal of Accounting and Economics, vol. 49, no. 1-2, pp. 109-132, 2010, doi: 10.1016/j.jacceco.2009.10.002.

[3] R. I. Salem, E. C. Eze, and E. I. Okoye, "Voluntary Disclosure and Financial Reporting Quality of Listed Firms in Nigeria," Journal of Accounting and Financial Management, vol. 1, no. 2, pp. 1-20, 2013.

[4] A. Khani and M. Mirbagheri Roudbari, "Examining the Effect of Firm Characteristics on Voluntary Information Disclosure in Companies Listed on the Tehran Stock Exchange," Accounting and Auditing Review, vol. 19, no. 2, pp. 71-86, 2012.

[5] M. H. Setayesh and M. Kazemnejad, "Identifying and Explaining Factors Affecting the Information Disclosure Quality of Companies Listed on the Tehran Stock Exchange," Accounting Advances, vol. 4, no. 1, pp. 49-79, 2012.

[6] L. Zamani, S. Barzoyan Shirvan, and S. Minaei, "Accounting Information Disclosure Quality and Institutional Shareholder Control During Market Recession," Modern Research in Accounting and Auditing, vol. 3, no. 1, pp. 57-87, 2020.

[7] R. Darabi, M. Moradi, and A. Asgari, "Examining the Effect of Information Disclosure Quality on Stock Liquidity of Companies Listed on the Tehran Stock Exchange," Accounting Knowledge, vol. 7, no. 25, pp. 131-152, 2016.

[8] S. P. Kothari, A. J. Leone, and C. E. Wasley, "Performance Matched Discretionary Accrual Measures," Journal of Accounting and Economics, vol. 39, no. 1, pp. 163-197, 2005, doi: 10.1016/j.jacceco.2004.11.002.

[9] A. Saghafi and M. Motamedi Fazel, "The Relationship Between Audit Quality and Investment Efficiency in Firms with High Investment Opportunities," Financial Accounting Research, vol. 3, no. 4, pp. 1-14, 2011.

[10] S. T. Bharath, J. Sunder, and S. V. Sunder, "Accounting Quality and Debt Contracting," The Accounting Review, vol. 83, no. 1, pp. 1-28, 2008, doi: 10.2308/accr.2008.83.1.1.

[11] R. M. Bushman, A. J. Smith, and R. Wittenberg-Moerman, "Price Discovery and Dissemination of Private Information by Loan Syndicate Participants," Journal of Accounting Research, vol. 48, no. 5, pp. 921-971, 2010, doi: 10.1111/j.1475-679X.2010.00384.x.

[12] R. Carrizosa and S. G. Ryan, "Borrower Private Information Covenants and the Loan Contracting Process," Journal of Accounting Research, vol. 55, no. 4, pp. 903-947, 2017.

[13] W. Jiang, K. Li, and P. Shao, "When Shareholders Are Creditors: Effects of the Simultaneous Holding of Equity and Debt by Non-Commercial Banking Institutions," Review of Financial Studies, vol. 23, no. 10, pp. 3595-3637, 2010, doi: 10.1093/rfs/hhq056.

[14] V. Ivashina and Z. Sun, "Institutional Stock Trading on Loan Market Information," Journal of Financial Economics, vol. 100, no. 2, pp. 284-303, 2011, doi: 10.1016/j.jfineco.2010.11.004.

[15] N. Massoud, D. Nandy, A. Saunders, and K. Song, "Do Hedge Funds Trade on Private Information? Evidence from Their Holdings of Loan Syndications," Journal of Financial Economics, vol. 102, no. 3, pp. 449-475, 2011, doi: 10.1016/j.jfineco.2010.10.002.

[16] N. Dass and M. Massa, "The Impact of a Strong Bank on the Capital Structure of Its Borrowing Firms," Journal of Financial Economics, vol. 99, no. 2, pp. 329-349, 2011.

[17] S. Chava, R. Wang, and H. Zou, "Covenants, Creditors Simultaneous Equity Holdings, and Firm Investment Policies," Journal of Financial and Quantitative Analysis, vol. 54, no. 2, pp. 481-512, 2019, doi: 10.1017/S002210901800090X.

[18] T. Tang, L. Xu, X. Yan, and H. Yang, "Simultaneous Debt-Equity Holdings and Corporate Tax Avoidance," Journal of Corporate Finance, vol. 72, p. 102154, 2022, doi: 10.1016/j.jcorpfin.2021.102154.

[19] L. Peyravan, "Financial Reporting Quality and Dual-Holding of Debt and Equity," The Accounting Review, vol. 95, no. 5, pp. 351-371, 2020, doi: 10.2308/accr-52661.

[20] L. Peyravan and R. Wittenberg-Moerman, "Dual Holders and Voluntary Disclosure: Evidence from the U.S. Market," Journal of Accounting and Economics, vol. 73, no. 2-3, pp. 101-125, 2022.

[21] L. Cheng, W. Jiang, and J. Wang, "Institutional Dual Holders and Corporate Disclosure," Journal of Accounting and Economics, vol. 79, no. 1, pp. 101-125, 2025.

[22] A. L. Boone and J. T. White, "The Effect of Institutional Ownership on Firm Transparency and Information Production," Journal of Financial Economics, vol. 117, no. 3, pp. 508-533, 2015, doi: 10.1016/j.jfineco.2015.05.008.

[23] R. Chung, M. Firth, and J. B. Kim, "Institutional Ownership and Opportunistic Earnings Management," Journal of Corporate Finance, vol. 8, no. 1, pp. 29-48, 2002, doi: 10.1016/S0929-1199(01)00039-6.

[24] B. Ajinkya, S. Bhojraj, and P. Sengupta, "The Association Between Outside Directors, Institutional Investors and the Properties of Management Earnings Forecasts," Journal of Accounting Research, vol. 43, no. 3, pp. 343-376, 2005, doi: 10.1111/j.1475-679x.2005.00174.x.

[25] G. Esmaeili Kia and B. Gholami, "Examining the Effect of Institutional Ownership on Information Disclosure Quality in Companies Listed on the Tehran Stock Exchange," Financial Accounting Knowledge, vol. 3, no. 3, pp. 95-114, 2016.

[26] M. Salehi, R. A. Ajel, and G. Zimon, "The Relationship Between Corporate Governance and Financial Reporting Transparency," Journal of Financial Reporting and Accounting, vol. 21, no. 5, pp. 1049-1072, 2023, doi: 10.1108/JFRA-04-2021-0102.

[27] Y. L. Hsu and Y. C. Yang, "Corporate Governance and Financial Reporting Quality During the COVID-19 Pandemic," Finance Research Letters, vol. 47, pp. 102-120, 2022, doi: 10.1016/j.frl.2022.102778.

[28] Y. Hassas Yeganeh, "Corporate Governance in Iran," Auditor Monthly, vol. 8, no. 32, pp. 33-34, 2005.

[29] H. Nikoomaram and H. Mohammadzadeh Salteh, "The Relationship Between Corporate Governance and Earnings Management," Productivity Management (Beyond Management), vol. 4, no. 15, pp. 187-209, 2010.

[30] S. A. Hashemi and Z. Younesi, "The Effect of Corporate Governance on Working Capital Management Efficiency," University of Isfahan, 2013.

[31] A. Ahmadpour, M. Khalili, and A. A. Shojaei, "Examining the Relationship Between Corporate Governance Mechanisms and Information Disclosure Quality in Companies Listed on the Tehran Stock Exchange," Empirical Accounting Research, vol. 7, no. 26, pp. 1-23, 2017.

[32] M. Moradi, E. Malekian, and G. Barzegar, "Examining the Weakness of Managers' Ethical Behaviors on the Corporate Governance System and Financial Reporting Quality," Accounting and Auditing Research, vol. 16, no. 61, pp. 5-24, 2024.

[33] A. A. Alizadeh and A. Valizadeh Oghani, "Corporate Governance and Financial Reporting Quality: The Moderating Role of Financial Misconduct," Strategic Studies in Business, vol. 2, no. 3, pp. 64-90, 2024.

[34] M. Farahmand, A. Soleimani, and M. Rahimi, "Examining the Effect of Corporate Governance Factors on Economic Growth Considering Information Disclosure in Companies Listed on the Tehran Stock Exchange," Industrial Economics Research, vol. 9, no. 32, pp. 120-145, 2025.

[35] G. Kordestani and R. Tatli, "Evaluating the Predictive Ability of Bankruptcy Models: A Comparison of Initial and Modified Models," Audit Knowledge, vol. 14, no. 55, pp. 51-70, 2014.

[36] M. Mahdipour, "The Effect of Financial Characteristics and Ownership Structure on the Timeliness of Financial Reporting with Emphasis on the Type of Auditor Opinion in the Tehran Stock Exchange," Management Accounting and Auditing Knowledge, vol. 15, no. 58, pp. 81-102, 2025.

[37] J. F. Houston, C. Lin, and Y. Shan, "The Impact of Litigation Risk on Corporate Disclosure," Journal of Accounting Research, vol. 57, no. 5, pp. 1203-1243, 2019.