The impact of periods of uncertainty on financial reporting quality: An application in Borsa Istanbul

This study aims to empirically examine the impact of periods of uncertainty on firms' financial reporting quality using evidence from Türkiye.The study comparatively analyzes the effects of economic crises, the pandemic period, and political uncertainty on financial reporting quality.In this context, the years 2001, 2008, 2012, and 2020 are considered periods of economic uncertainty, while the years 2002, 2015, and 2018 are classified as periods of political uncertainty.The analysis is based on a dataset comprising 3,465 firm-year observations from 375 firms operating in the service, manufacturing, and technology sectors listed on Borsa İstanbul over the period 2000-2022.Financial reporting quality is measured using the performance-matched modified Jones model, and panel data analysis methods are employed.Model selection tests indicate that the fixed effects approach is appropriate, while heteroskedasticity, autocorrelation, and cross-sectional dependence are detected.Therefore, the estimations are conducted using Driscoll-Kraay robust standard errors.The results indicate that economic uncertainty generally enhances financial reporting quality, with the effect being statistically significant particularly during the 2012 crisis.In contrast, the impact of political uncertainty is limited, as only the 2002 election year exhibits a negative and statistically significant effect on financial reporting quality.