Financial Accounting Research
Year:2011 | Volume:3 | Issue:2 (8)|Papers Count:13

This paper investigates the behavior of accounting fundamentals considering the business cycle in companies listed in Tehran Stock Exchange (TSE). The accounting fundamentals that investigated are sales growth, changes in gross margin, changes in income before tax, changes in net income, and total asset growth. The study finds that sales growth and changes in gross margin are positively associated with economic conditions (business cycle). There are systematic differences in accounting sensitivity to the business cycle that can be explained by industry- and firm-specific characteristics. For cyclical industries, the influence of the business cycle exists only on sales but not on the other variables. Further analysis shows that accounting sensitivity to the business cycle decreases with firm size.

This paper examines the association between corporate governance mechanisms and the quality of accounting earnings. It is discussed and predictable that suitable corporate governance mechanisms make financial reporting more observable and prevent it from low quality. We investigate whether accrual quality, earnings persistence and earnings predictability are affected by the corporate governance. Also, we consider three corporate governance variables: extent of independent (non executive) directors, board leadership, and the number of meetings. We test our hypothesis using a sample of 600 firm-year observations of Tehran Stock Exchange (150 firms during 2005-2008).The findings show that the increasing the number of non executive directors and board meetings strengthen the firm’s earning quality (earnings persistence and its predictability). However, we find no relation between leadership structure and firms’ earnings quality (again, earnings persistence and its predictability). Surprisingly, our results indicate that there is no significant relationship between corporate governance and accruals quality as a measure for earnings quality.

This research, initially is measures the income smoothing of the companies listed in Tehran stock exchange via the negative correlation between the changes in discretionary-accruals and pre-discretionary income. The aim is to investigate whether the listed companies in Tehran stock exchange, with regard to their responsibility over stock market price, performed income smoothing or not. Therefore, the effect of income smoothing on companies stock market price is analyzed. Then, is the effective factors on companies' income smoothing behavior is also studied. Therefore, liquidity ratio (current ratio), debt ratio (interest coverage ratio), and profitability ratio) return on equity) are considered as independent variables and income smoothing as a dependent variable. The number of the sample companies for a 12-year period (1376-1387), eventually reached 163 companies. The findings indicate that income smoothing causes an increase in companies’ stock market price, and current ratio, interest coverage ratio, return on equity, are in negative correlation with income smoothing.

This paper investigates income smoothing through the asset sales. We tested income smoothing in the level of operating income.The test based on a linear multi-regression analysis for the companies listed in Tehran Exchange during 1381-1385. Investigation supports income smoothing so that managers use the gains and losses of the asset sales to smooth earnings. Our evidence also indicate that the level of smoothing in the companies that experience lower level of operating income is more than those which experiencing higher level of operating income.

This article investigates the association between errors in management forecasts of subsequent year earnings and current year accruals. In an uncertain operating environment, managers’ assessments of their firms’ business prospects are imperfect. Since managers’imperfect business assessments influence accruals generation and earnings projection, this article hypothesize that management earnings forecasts exhibit greater optimism (pessimism) when accruals are relatively high (low). Consistent with this hypothesis, Findings show a positive association between management earnings forecast errors and accruals. Also findings show this positive association is stronger for firms with more cash flow volatility.

This study explores the relationship between corporate governance mechanisms and capital structure of listed non-financial companies in Tehran Stock Exchange. In the other words the impact of corporate governance mechanisms on the capital structure is investigated. The research sample consists of 80 firms listed in Tehran Stock exchange for the period of 2001 to 2008. The multivariate regression analysis under panel data approach is used to examine the hypotheses and signification of the model is examined by T and F statistics. Measures of corporate governance employed are proportion of non-executive directors, CEO/Chair duality and institutional shareholding. The results consistently produce strong support for the existing a positive and meaningful association between institutional shareholding as a n outsider corporate governance mechanisms and capital structure. However capital structure is not found significantly influenced by CEO/Chair duality and the presence of non-executive directors on the board.

The present study aims at investigating ownership structure on earning management. In earlier studies, the effects of factors related with corporate governance have been neglected. Thus Ownership structure, in the present paper has been classified into four categories: institutional ownership, corporate ownership, managerial ownership, and external ownership. As no data was found for foreign investors' ownership, thus this type of ownership was not investigated. A hypothesis was formulated for any of the other levels of ownership and its effect on earning management was investigated. For each of the hypotheses, a multiple linear regression model was used. The corporate accepted in Tehran stock exchange during the years 1383-1387 were the population of the study and the research sample consisted of 95 corporate. T-Test and multiple regression were used for the purpose of analyzing the hypotheses. The findings indicated that there is a significant negative correlation between institutional ownership and managerial ownership with earning management but there is a significant positive relationship between corporate ownership and earning management.

In this paper we provide evidence on the monitoring role of institutional investors from the point of view, whether institutional investment affects informative of reported accounting earnings of companies in Tehran Stock Exchange. In order to measure informative of earnings, three models that evaluate different aspects of informative, have been estimated, so that affect of changes in accounting earnings, earnings to price ratio and earnings to book value ratio on stock returns have been considered as informative of accounting earnings. The population includes the top 100 companies in Tehran Stock Exchange from (1378-1383), with respect to their returns, and the sample includes 39 companies. Related models have been tested by multivariate and single regression moles.The results of overall test of models of research show that the role of institutional investors' ownership has no affect on informative of accounting earnings and the most influencing variables on returns are earnings to price ratio, earnings to book value ratio and changes in earnings. The results also show positive and significant affect of ownership and concentration of institutional investors, separately, on returns.

The main purpose of this study is the proper recognition and comprehension of effective factors and the criteria which can affect managers’ decision on capital expenditures in companies listed in T.S.E.First by reviewing theoretical framework and the related literature, independent variables are recognized then, using the data of 81 listed companies in T.S.E between 2001 to 2007 and with the using multi-dimensional analysis a model for capital expenditure changes is utilized. The findings show that there is a significant relationship between cash flow and capital expenditure changes.