Examining the Impact of Liquidity and Financial Leverage on Financial Reporting Quality of Commercial Companies with an Emphasis on the Moderating Role of Cloud Accounting

Document Type : Original Article

Authors
Peshkaut abdulla abdulkarim AL_zangana 1
Zohre Hajiha 2
Hamidreza Kordlouei 3
1 Ph.D Student, Department of Accounting, SR.C., Islamic Azad University, Tehran, Iran.
2 Professor, Department of Accounting, ST.C., Islamic Azad University, Tehran, Iran.
3 Associate Professor, Department of Accounting, Isl.C., Islamic Azad University, Islamshahr, Iran.
10.22034/jik.2026.79256.4954
Abstract
This study aims to investigate the impact of liquidity and financial leverage on the quality of financial reporting, as well as the moderating role of cloud accounting in commercial companies. In the first model, the direct effects of liquidity and financial leverage on financial reporting quality were examined. The results obtained from estimating the regression model using the Generalized Least Squares (GLS) method indicated that liquidity has a positive and significant effect on financial reporting quality; firms with higher liquidity levels, due to reduced financial constraints, possess greater ability to produce accurate, transparent, and reliable financial reports. In contrast, financial leverage exhibited a negative and statistically significant impact on financial reporting quality, reflecting increased contractual pressures, credit risk, and managerial incentives to manipulate information in highly leveraged firms.
In the second model, the role of cloud accounting as a transformative technology in the financial reporting system was assessed. Findings showed that cloud accounting has a strong, positive, and significant effect on financial reporting quality by enhancing internal control systems, increasing data processing speed, and providing real-time access to financial information, thereby improving the reliability and transparency of financial reports. Moreover, the results demonstrated that cloud accounting strengthens the positive relationship between liquidity and financial reporting quality and reduces the negative effect of financial leverage. In other words, cloud-based technology plays a crucial role in reinforcing firms’ financial functions and reducing their vulnerability to liquidity constraints and debt pressure.
Keywords
Financial reporting quality
Liquidity
Financial leverage
Cloud accounting
Moderating effect
Smart financial reporting
Capital structure
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