Forecasting Economic Recession and Growth Using Corporate Financial Misreporting
Keywords:
Economic Recession, Economic Growth, Financial MisreportingAbstract
This study aims to examine the ability of corporate financial misreporting to predict economic recession and economic growth in firms listed on the Tehran Stock Exchange. The research is classified as fundamental-experimental in purpose and descriptive-correlational in nature. The statistical population included all firms listed on the Tehran Stock Exchange between 2012 and 2023. Using the systematic elimination method, 105 firms were selected as the sample. Data were gathered from financial statements, explanatory notes, and official stock exchange resources. Multiple regression and logistic regression models were employed, and data analysis was conducted using Eviews and Stata software. The results indicated that financial misreporting (measured through the adjusted Beneish M-Score) significantly predicts economic recession, with logistic regression coefficients confirming the first hypothesis (p<0.05). Moreover, panel regression results demonstrated that financial misreporting also predicts future economic growth. Control variables such as exchange rate, consumer price index, and firm size were also found to have significant effects on economic outcomes. The findings highlight that distorted financial reporting can serve as a reliable predictor of both economic recession and economic growth. These insights provide valuable implications for policymakers, regulators, and investors seeking to enhance decision-making processes and mitigate risks associated with misreported financial information.
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Copyright (c) 2025 Shirin Montashi, Mahnam Molaei, Maryam Farhadi, Javad Foruzandeh (Author)
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