The Research Department of Economics and Management of Tadbir Nikan Business, Marketing, and Finance Open 3 Serial Number 14 2026 03 01 The Role of Financial Reporting Quality in Reducing Information Asymmetry and Improving Investment Efficiency in Listed Companies The Role of Financial Reporting Quality in Reducing Information Asymmetry and Improving Investment Efficiency in Listed Companies 1 8 10.61838/bmfopen.320 EN Journal Article 2025 06 12 <p>In capital markets, financial reporting quality is recognized as a key mechanism for reducing the information gap between managers and investors and enhancing economic decision-making. When information asymmetry is high, resource allocation becomes inefficient, and the likelihood of deviation from optimal investment levels increases. The primary objective of this study is to examine the effect of financial reporting quality on reducing information asymmetry and improving investment efficiency in companies listed on the Tehran Stock Exchange. This research is applied in purpose and descriptive–correlational in method. Data from 120 manufacturing companies were collected and analyzed over the period 2019 to 2023. Financial reporting quality was measured using the Dechow and Dichev (2002) model, and investment efficiency was assessed using the Biddle et al. (2009) model. Data analysis was conducted using multiple regression and EViews software. The results revealed that financial reporting quality has a significant effect on reducing information asymmetry and investment deviations, including both overinvestment and underinvestment. Companies that provide higher-quality financial reports have been more successful in allocating financial resources to profitable projects. High-quality financial reporting is not only an instrument for monitoring managerial behavior but also a critical factor in enhancing transparency, reducing the cost of capital, and increasing investor trust. Improving the quality of financial reporting requires the development of supervisory institutions, professional training, and the reform of corporate governance mechanisms.</p> https://www.bmfopen.com/index.php/bmfopen/article/download/320/249