دانشگاه اصفهان مدیریت دارایی و تامین مالی 2383-1189 14 3 2026 09 23 Investigating the Role of Financial Information Readability on Obtaining Credit Financing with Emphasis on the Effectiveness of Competition in the Product Market بررسی نقش خوانایی اطلاعات مالی بر دستیابی به تأمین مالی اعتباری با تأکید بر اثربخشی رقابت در بازار محصول 125 142 29937 10.22108/amf.2025.145922.2002 FA عبدالرسول رحمانیان کوشککی استادیار، گروه حسابداری، دانشگاه پیام نور، تهران، ایران گلنار بلوچی کارشناسی ارشد، گروه حسابداری، دانشگاه پیام نور، تهران، ایران Journal Article 2025 07 11 This study examines the impact of financial statements readability on corporate credit financing, with a specific focus on the moderating role of product market competition. Employing a causal research design, the analysis uses a sample of 141 companies listed on the Tehran Stock Exchange over the 10-year period from 2014 to 2024. The findings indicate a significant positive relationship between financial statement readability and access to credit. Furthermore, product market competition is shown to negatively moderate this relationship. Specifically, heightened competition attenuates the positive effect of readability, thereby constraining firms' ability to secure credit financing. These results underscore how competitive market forces can limit financial flexibility, even for firms with transparent disclosures. Keywords: Readability of Financial Information, Credit Financing, Product Market Competition, Stock Exchange JEL Classification: G30, G38, G40 Introduction Competitiveness denotes a firm's capacity to maintain its market position, protect corporate assets, ensure returns on investment, and safeguard future employment. Given this scope, competition exerts a substantial influence on corporate activities and strategic decisions (Khoddadi & Rashidi Baghi, 2014). A principal metric for evaluating market competition, monopoly power, and industry structure is the degree of concentration. Market concentration describes the distribution of market share among firms within an industry, effectively indicating the extent to which a small number of firms dominate total industry output. Consequently, industries with fewer participants typically exhibit higher concentration levels. An analysis of firms listed on the Tehran Stock Exchange (TSE) confirms this pattern; in major sectors such as petrochemicals, steel, automotive manufacturing, and financial intermediation, a limited number of large companies control the majority of industry sales, resulting in highly concentrated market structures. As noted in prior research, these dominant firms achieve superior sales revenues compared to their industry peers, a direct outcome of their market control (Khoddadeh Shamloo & Gharsi, 2018). Porter (1990) contends that product market competition shapes managerial decisions and is a critical determinant of corporate profitability. The competitive literature further posits that intense competition serves as an incentive for managerial efficiency, as competitive markets swiftly discipline underperformance. Thus, product market competition functions as an external governance mechanism, monitoring management and mitigating agency costs (Khoshkar & Farghani, 2020). Competitiveness can also be defined as an economic entity's ability to maintain or increase its share in international markets. A firm's sales volume is a reflection of its market influence; as such, companies are driven to preserve and expand their market share. This often leads to enhanced service quality for stakeholders—including the quality of disclosed financial information. Such improvements attract the attention of stakeholders and creditors, thereby indirectly influencing access to credit-based financing (Li et al., 2024). The research gap addressed by this study arises from the scarcity of comprehensive research that examines these factors in concert. Previous studies have predominantly investigated the impact of financial report readability on investor and creditor decisions in isolation. Financial information readability—defined as the ease with which financial statements can be understood—enhances transparency, reduces information asymmetry, and lowers financing costs. Simultaneously, the intensity of product market competition can alter managerial incentives and significantly influence financial performance and resource acquisition. The complex interplay between information readability and competitive market conditions remains a notable theoretical void. Furthermore, the role of product market competition in determining financial resource access establishes a foundation for improving credit acquisition capacity. Intensified competition encourages optimal resource utilization and fosters financial reporting transparency, which may, in turn, amplify the effect of financial information readability on credit financing. However, existing literature has inadequately explored the moderating role of product market competition, particularly within emerging markets characterized by unique institutional features. These considerations motivate the present study to address a critical scientific and practical gap by concurrently examining the roles of financial information readability and product market competition in corporate financing processes. Hypothesis 1: A significant relationship exists between financial information readability and access to credit-based financing. Hypothesis 2: Product market competition moderates the relationship between financial information readability and access to credit-based financing. Materials & Methods This study employs a dataset comprising firms listed on the Tehran Stock Exchange (TSE). The data were sourced from the CODAL and TSE official websites and analyzed using EViews 12 software. The sample includes all companies listed on the TSE. This sample was selected based on data accessibility, its direct relevance to the research context, and the availability of audited, reliable financial statements. Following the application of systematic exclusion criteria detailed in Table 1, the final sample consists of 141 companies observed over the 10-year period from 2014 to 2023, yielding a balanced panel of 1,410 firm-year observations. Findings Descriptive statistics are reported for the panel of 141 sample companies over the 10-year period from 2013 to 2022 (1,410 firm-year observations). The mean value for financial leverage is 0.53. The values of this parameter for firm size and return on assets are 1.72 and 0.15, respectively, with their standard deviations suggesting the dispersion around these means. The minimum and maximum values reported for each variable delineate their observed ranges. The diagnostic tests, summarized in Table 3, confirm the presence of cross-sectional dependence and serial correlation in the initial models. To address these issues, the models were estimated using the Generalized Least Squares (EGLS) method in EViews 12, which employs a robust variance-covariance matrix to correct for heteroskedasticity. Furthermore, the inclusion of an AR(1) term in the final model specification successfully mitigated the problem of serial autocorrelation. A Chow test, significant at the 5 percent level, supported the use of a panel data approach. Subsequently, a Hausman test, also significant at the 5 percent level, indicated that the fixed effects estimator was more appropriate than the random effects estimator for the final analysis. Based on the results, the financial information readability variable exhibits a positive and significant relationship with credit financing, with a coefficient of 0.54 (p < 0.01). Therefore, the first hypothesis is supported at the 1 percent significance level. The model demonstrates a high explanatory power, with an R-squared of 0.91, indicating that the independent and control variables account for 91 percent of the variation in the dependent variable. Furthermore, all variance inflation factor (VIF) values are below 5, confirming that multicollinearity is not a concern. The overall model fit is confirmed by the F-statistic, which is significant at the 1 percent level. The results for the second hypothesis are as follows. The interaction term between financial information readability and product market competition has a negative and significant coefficient of -0.46 (p < 0.01), indicating a negative moderating effect on credit financing. Thus, the second hypothesis is also supported at the 1 percent level. This finding suggests that increased product market competition attenuates the positive effect of financial readability on access to credit; in other words, competition acts as a moderating variable that weakens the benefit of readable disclosures. Qualitatively, this may be attributed to the heightened risk and uncertainty inherent in competitive markets. Intense competition pressures profitability and liquidity, potentially increasing lenders' perceived risk and caution in extending credit, thereby overshadowing the transparency benefits of readable reports. The model's R-squared is 0.90, the Durbin-Watson statistic is 1.89, and the VIF statistics remain below 5, collectively indicating a well-specified model with a strong fit, as confirmed by the significant F-statistic. Discussion and conclusion As mentioned before the primary objective of this study was to investigate the role of financial information readability in securing credit financing, with a specific emphasis on the moderating effect of product market competition. The novelty of this research lies in its integration of two significant domains—financial economics and industrial organization—which have seldom been examined in a simultaneous and interactive manner. By combining the concept of financial report readability, which underscores information transparency and comprehensibility, with the dynamics of product market competition, this study establishes a new framework for understanding corporate resource acquisition mechanisms. The focus on competition as a moderating variable constitutes the central innovation, demonstrating how market competition intensity can influence the relationship between financial information quality and access to credit. This approach contributes new knowledge to the field of corporate finance and offers insights for refining credit policies in emerging markets, thereby addressing a significant theoretical and practical gap. Specifically, this study breaks new ground by analyzing the interplay between financial readability and product market competition, factors that have previously been studied in isolation. By focusing on financial report readability as a mechanism for enhancing transparency and reducing information asymmetry, and by analyzing the moderating role of market competition, this study offers a novel perspective on the corporate financing process. Consequently, it addresses a critical void in the literature, highlighting the significant role of the interaction between information quality and market structure in improving firms' access to credit, particularly within emerging economies. The results from the first hypothesis confirm a significant positive relationship between financial information readability and trade credit financing. Specifically, when companies provide accurate, comprehensible, and unambiguous information in their financial statements, it serves as a positive signal to financial statement users. This signal assures creditors that the firm has not engaged in informational obfuscation and possesses a sound financial position capable of repaying its obligations, thereby increasing the company's access to trade credit. Thus, the clarity and lack of complexity in financial disclosures directly influence credit-based financing. These findings align with existing research in this domain, such as Li et al. (2024). In essence, transparent and understandable financial information acts as a credible signal to creditors, bolstering their confidence in the firm's financial health and repayment capacity. This, in turn, increases creditors' willingness to extend financial resources and ultimately facilitates more favorable trade credit conditions for firms. Therefore, improving the quality and transparency of financial disclosures is not merely a regulatory or ethical imperative but also an effective strategy for enhancing financing efficiency in competitive markets. The results from the second hypothesis indicate that product market competition significantly moderates the relationship between financial information readability and access to credit financing. The negative and significant interaction term reveals that heightened competition diminishes the positive effect of readability on credit access. In highly competitive industries, where numerous firms vie for market share, managers are compelled to offer greater benefits to stakeholders to capture a larger market segment. This intense rivalry for resources can create challenges in securing trade credit, leading to reduced access. These findings are partially consistent with prior work, such as Li et al. (2024). Specifically, under conditions of high market competition, firms face increased pressure on their financial resources as they strive to offer competitive terms to stakeholders. In such an environment, even high levels of financial transparency may be insufficient to ease credit constraints, as creditors perceive higher competitive risks and consequently adopt more cautious and stringent lending practices. This finding underscores the complexity of financing in competitive markets, indicating that access to credit is not solely a function of information quality but is also critically shaped by external market conditions. هدف پژوهش حاضر بررسی نقش خوانایی اطلاعات مالی بر دستیابی به تأمین مالی اعتباری با تأکید بر اثربخشی رقابت در بازار محصول است. نمونۀ آماری، کلیۀ شرکت‌های پذیرفته‌شده در بورس اوراق بهادار تهران است که با استفاده از روش حذف سیستماتیک، درنهایت 141 شرکت انتخاب و در دورۀ زمانی 10ساله بین سال‌های 1393 الی 1402 بررسی شد. نتایج حاصل از آزمون فرضیۀ اول پژوهش نشان داد که میان خوانایی اطلاعات مالی و دستیابی به تأمین مالی اعتباری رابطۀ مستقیم و معناداری وجود دارد. نتیجۀ آزمون فرضیۀ دوم نشان داد که رقابت در بازار محصول بر رابطۀ میان خوانایی اطلاعات مالی و دستیابی به تأمین مالی اعتباری تأثیرگذار است. درواقع با تعامل رقابت در بازار محصول و خوانایی اطلاعات مالی، دستیابی به تأمین مالی اعتباری کاهش خواهد یافت؛ بنابراین، رقابت در بازار محصول می‌تواند دسترسی شرکت‌ها به تأمین مالی اعتباری را محدود کند.

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