Ali Ghayouri moghadam

Objective: Beyond financial statement numbers, narrative disclosure is a ubiquitous feature in the management reporting environment and is considered a rich repository of value-related information that could be harnessed to enhance decision-making by investors, creditors, and other capital providers. Such narratives can provide a useful setting for understanding the generation process of numerical financial data and they offer a promising way to gauge firms’ financial reporting quality and the characteristics of corporate disclosures. Method: To achieve the research goal, the principal component analysis method was used to measure the CEO's power, and the Fog index was used to measure the readability of financial reports. The research hypotheses, made using 105 companies listed on the Tehran Stock Exchange in seven years from 2015 to 2021, were statistically tested based on a multiple regression model. Results: The results show that the CEO's power has a positive and significant effect on the readability of financial reporting. Also, earnings management has a negative and significant effect on the relationship between the CEO's power and the readability of financial reporting. Finally, the results showed that institutional investors have a positive and significant effect on the relationship between the CEO's power and the readability of financial reporting. Conclusion: As the CEO's power increases, the readability level of financial reporting increases. However, powerful CEOs publish more complex financial reports with less readability to hide their opportunistic behavior and reduce the possibility of its identification by investors, financial analysts and other legal entities when their companies are performing poorly, which is in accordance with the hypothesis of ambiguous management. Also, institutional shareholders can supervise the company's management with sufficient knowledge and experience in related financial and specialized fields. The supervision of insti