Towards A Holistic Understanding of Financial Reporting Quality Determinants: A Systematic Review

Abstract

This paper provides an up-to-date Systematic Literature Review (SLR) of the determinants of Financial Reporting Quality (FRQ). The review analyses 143 relevant articles on FRQ determinants retrieved from the Scopus database. This study extends prior reviews by examining publication trends, the theories and models applied, the measures of FRQ used and the future research agenda concerning studies on FRQ determinants. The determinants identified in the literature are grouped into seven clusters: Corporate Governance, Audit, International Financial Reporting Standards (IFRS) Adoption, Technology, Business Profile and Performance, Other Internal Factors and Other External Factors. Among these, Corporate Governance remains the most widely studied, while Technology has recently gained significant research attention. Agency Theory, Stakeholder Theory and the Modified Jones Model are the most employed in studies relying on secondary data, while the International Accounting Standard Board (IASB) Framework's qualitative characteristics are most frequently used as the basis for FRQ measurement in primary data studies. However, the lack of a comprehensive FRQ index in prior research highlights a key gap and opportunities for future studies. Overall, this paper provides a comprehensive FRQ research landscape and syntheses the main drivers of FRQ explored in the existing literature.