Journal of Accounting Advances
Year:2009 | Volume:1 | Issue:1 (57/3)|Papers Count:12

Introduction: Today individuals, organizations and markets information can control the speed of world changes. Management always faces many challenges in decision making that draw more attention to the accuracy and relevancy of this information. Thus organizations and markets should pay attention to the information and make transparent information flow. Information transparency plays an important role in organizations, markets and is a main element in decision making and controlling the information flow. Among these markets, capital market strongly needs information transparency to get the beneficial results. This market directs people savings and has an important role in economic development. Thus capital market transparency can increase investment and brings up a competitive market. Efficient information transparency of capital market transfers information that is available for special man or organizations to individual investments and causes higher transparency. Also better disclosure reduces the information asymmetry between firm's management and financial stockeholders. The purpose of this study is to prioritize the methods of increasing capital market transparency - informative, regulation and privatization approaches- by regarding liquidity, price discovery and transaction costs criteria. This goal is reached by using Analytic Hierarchy Process (AHP). Research Hypotheses: To assess the purpose of this study, three research hypotheses that is tested by liquidity, price discovery and transaction costs are chosen. These hypotheses are as follows: 1- A method that increases information of individuals from the mechanism of stock exchange can be used as an optimum approach. 2- A method that its emphasis is on market transparency regulations can be an optimum approach. 3- A method that uses privatization as a main element for increasing market transparency can be an optimum approach.Research Method: On the basis of purpose and method this study is practical and descriptive research. Population is chosen from investors, brokers and experts of Tehran stock exchange (TSE). Brokers and experts work with information continually and are the transferor and publisher of information. Experts are the analyzer of financial information and play an important role in assigning of market disclosure. Investors are the main user of information and decide on the basis of these publishing information and analysis. So this statistical population has major effect on liquidity, price discovery and transaction cost. After doing analysis the minimum quantity of investors, brokers and experts as samples of this study were 153, 22 and 49 respectively. Also a questionnaire was used in order to collect data that was analyzed by AHP.Results: According to the results informative approach has the greatest weight in three groups of investors, brokers and experts. Enactment and doing regulations and privatization approaches are the next priorities respectively. Thus informative approach is recognized as the best approach for increasing market transparency. So the first hypothesis has been confirmed. Attention to the AHP results enactment and doing regulations approach has a special effect on price discovery criterion. In other words, regulations play an important role in price assigning and close ask and bid prices together. But the assessment of criteria priority shows price discovery criterion is the third priority of the three groups. So final weight of enactment and doing regulations approach is in second priority altogether and is not recognized as a best approach for capital market transparency. Also privatization is in the third priority with respect to existing criteria in all three groups and the weight is less than the other two approaches. Ultimately results show final weight of privatization approach is in third priority. Therefore this approach is not the best either. Consequently the second and third hypotheses have not been confirmed.Discussion: Attention to the analysis, investors, brokers and experts of TSE consider increasing the awareness of individuals as a preferable approach for growing liquidity and decreasing costs. Also they select enactment and doing regulations as a preferable approach on price assigning and increasing price discovery. Transaction costs are the most important factor according to investors and liquidity according to the brokers and experts. In other words market investors prefer accessing enough and in time information with respect to liquidity and price discovery criteria. Thus decreasing transaction costs open the way for investing people in capital market, so market liquidity increases and ask-bid prices assign soon, close to each other and form fixing price act.Conclusions: Briefly informative approach is the best approach from the view point of investors, brokers and experts among existing approaches and regulations and privatization is the next priority in this respect. Finally Stock Exchange can use the result of this study for increasing market efficiency and establishing practical information transparency model. Management, brokers and investor-especially individual investors– can make the correct decision by using accurate, in time and perfect information.

Introduction: This paper discusses the current position of Customer Profitability Analysis System (CPAS) in Iranian Banks and the attitude of Iranian bank managers about CPAS. Nowadays, focusing on customers in organizations leads to strategy. Therefore, it is important to have information about customers. This information includes customer profitability, that management accountants measure it with customer profitability analysis system. As the private sector has developed, competition in bank industry has become more serious. In order to increase the competition power, the banks should develop their strategies based on customers. Accounting, also should match itself with these strategies by focusing on customers. One of the most important roles of accounting in relation to collecting information is customer profitability analysis. Having information about current position of customer profitability analysis system in Iranian private banks and management attitude toward this system is a first step for applying information technology in banks.Research hypothesis: This article attempts to study the current position of CPAS in Iran’s private banks. Customer profitability is the difference between revenues from customer and their costs. Customer profitability can accurately be measured using Activity Based Costing (ABC), which uses the concept of revenue and cost drivers ABC. In CPAS, the cost subject is "Customer". There are five main hypotheses in this study: 1- Customer Profitability Analysis System in Iranian banks is undeveloped. 2- The attitude of Iranian bank managers toward the necessity of practicing Customer Profitability Analysis System is positive. 3- Iranian bank managers believe that the information from Customer Profitability Analysis System affects managers decisions. 4- Iranian bank managers prefer LCPAM method of Customer Profitability Measurement for their Banks. 5- Iranian bank managers believe that practicing Customer Profitability Analysis System is possible.Methods: This article is a survey research. The instruments for data collection in survey research are interview and questionnaire. We used questionnaires in this study to collect the needed data. We sent 140 questioners to managers of four private banks. These banks are “Eghtesad Novin”, “Parsian”, “Saman” and “Karafarin”. From these 140 questioners, 92 questioners were used for hypothesis testing. The validity and reliability of the questioners were tested by receiving the expert’s opinion. We analyzed the information from the questionnaires based on descriptive and inferential statistics. The chi- square and population proportion tests were used to evaluate the results of investigating the Iranians manager’s attitude toward customer profitability analysis. The current position of CPAS is determined by census. The hypotheses related were tested by different statistical methods. To test Hypothesis 1 "descriptive" research method is used. To test Hypothesis 2 and 3 "survey" research method is used and the sampling method is random stratified sampling. To test Hypothesis 2 and 3 Chi-square and to test Hypothesis 4 and 5 population proportion test is used.Results: This paper reviews the current position of Customer Profitability Analysis System (CPAS) in Iranian Banks and the attitude of Iranian bank managers about CPAS. The results illustrate that CPAS in Iranian banks is undeveloped and the attitude of Iranian bank managers toward the necessity of practicing CPAS is positive. They believe that the information from CPAS affects managers’ decisions about loans payment, interest rate of loans, relationship with customer, pricing and marketing strategies. While Iranian bank managers don't prefer any method of Customer Profitability Measurement, they believe that practicing CPAS is possible.Discussion and conclusion: As mentioned, the purpose of this paper is investigating the Customer Profitability Analysis System in Iran’s private banks. The results show the lack of the systems that measure the profitability of the customers and the positive attitude of Iranians bank managers toward CPAS. To establish this system, bank accounting systems need fundamental changes. In other words, the pre requisite of CPAS is activity based costing. In this situation we have the opportunity to calculate the customers cost. Estimating customer’s standard cost, calculating fellow-up cost in the case of customer’s failure and distinguishing cost based on the customers are the important subjects in this area that is missed among the information prepared in the present bank system. Bank managers believe that this information has a great impact on their decisions such as pricing and marketing strategies, eliminating a customer or making a deals with new customers. The reasons for undeveloped Customer Profitability Analysis System in Iran’s private banks, is an important area which is not mentioned in this paper. Working on this subject is recommended for future researches. In addition, researchers can formulate an optimal model for private banks or bank industry as a whole. To achieve this goal, studying the current accounting systems and determining the ways of improving them can be considered as an appropriate starting point.

Introduction: Identifying factors that influence the price of shares and how pricing shares are one of the subjects discussed in financial management. In order to increase the shares value that is one of the major goals of the company, management needs awareness of the factors that influence market value of the company. There are many fields in accounting research, commercial strategy, economy and finance that use the values of stock market. Because investors don't have the same interpretation of the new information, stock prices may remain unchanged until information is revealed for the market. When this happens some investors interpret new information as good news and some other as bad news. So the price changes in fact reveales investors reaction averages to the news that is published. Also stock returns may only change if trading volume increases. In addition to stock returns, trading volume and return volatility also represent set of available relevant information in the market. Unlike the price and stock returns, change and reform investors expectations, always lead to an increase in trading volume that in fact represents collection of investors’ reactions to new news. More studies in stock market focus on the price of shares and its behavior during the time. But for some random and unpleasant characteristics stock prices, instead of stock prices often research focuses on stock returns. According to the existing information about the company, stock returns reflect investors' expectations about future performance of the company. New information has caused to change investors' expectations and in fact is the main reason for the shares price fluctuations. The participants in financial markets have been using next predicted returns between two periods as criteria for the lack of confidence in the market to increase their interests. Correct predicted future changes are very important for many assessments and pricing financial models. This study investigates the empirical relationship between stock returns, return volatility and trading volume using data from the Tehran Stock Exchange. The sample contains stock return and trading volume monthly data from Tehran Stock Exchange from 1377/07/01 through 1385/03/31.Research Questions or Hypothesis: In this study our hypotheses are: H 1: Stock returns are positively associated with trading volume. H 2: There is dual-causality relationship between Stock returns and trading volume.Methods: The empirical methods used include cross-correlation analysis, unit-root tests, bivariate simultaneous equations regression analysis, GARCH modeling, VAR modeling and Granger causality tests.Results: This study is based on studies done about stock market in other countries (the relation between stock returns, return volatility and trading volume). In this study in addition to investigating contemporaneous relations between variables, causal relationships are considered as well. The results revealed that there is dependence and relationship between stock returns and trading volume in Tehran Stock Exchange and awareness of the stock returns will improve short-term prediction of trading volume. On the other hand hypotheses of existing positive relationship between return volatility and trading volume is proved; also more interesting is that this relationship shows mono-causality relationship from return volatility to trading volume. Therefore, Tehran Stock Exchange can help shareholders for decision-making by presenting information about the reasons for return volatility.Discussion and Conclusion: This study concluded with examining cotemporaneous and causality relationship that forecasts of one of these variables can be only slightly improved by knowledge of the other. On the other hand, the results of research indicate that there is a cotemporaneous relationship between return volatility and trading volume. Additionally, by applying Granger’s test for causality, is concluded that return volatility contains information about upcoming trading volume.The other findings in this study show that there is a weak evidence of existing contemporaneous relationship between return volatility and trading volume. The results show that there is a mono-causality relationship from stock returns to trading volume. That is, the knowledge of stock returns may improve short-term prediction of current or future trading volume (the opposite is not true). The trading volume and return volatility have mono-causality relationship from return volatility to trading volume. This result rejects previous findings that any kind of price changes for future deals is informative. The findings of the study also show that increase in stock returns will increase trading volume. The results achieved by the use of Granger Causality Test show mono-causality relationship between stock returns and trading volume. It means that the flow of information is not simultaneous, rather is in succession and entering new information does not follow a simultaneous process and Tehran Stock Exchange is not efficient. Findings of this study, in some respects, are different from previous studies’ findings. While previous studies only supported the contemporaneous relationship and weak correlation between stock returns and trading volume, we bound simultaneity and considerable dynamism in relations between these variables. Findings of this study can help to better understand stock market infrastructures, especially the emerging markets. Since Iran stock market in comparison with developed markets is weak and small, more comparative experimental study is needed. Variables like privatization, government policies and economic factors which may affect the relationship between stock returns and trading volume can be part of limitations in this study.

Introduction: The resource-based view of the firm views firm resources as the main driver behind competitiveness and firm performance. These resources include both tangible physical assets as well as intangible assets that have been internalized by firm and used effectively and efficiency to implement specific competitive and profitable strategies. The first types of assets, generally tangible, such as property, plant and equipment and physical technologies are common place in the market, easily imitable and substitutable, and can be easily purchased and sold on the open market. The second types of assets, generally intangible, valuable, rare, mostly inimitable and non-substitutable, are strategic assets capable of generating sustainable competitive advantage and superior financial performance. While many types of intangible assets may qualify as strategic assets, the strict application of the above criteria reduces the number to few in general and to intellectual capital in particular. Thus it is expected that intellectual capital has the ability of generating sustainable competitive advantage and superior financial performance. Hypothesis: In order to achieve the objectives of this research, the following hypotheses are developed and tested: 1) There is a significant relationship between a company’s intellectual capital and its performance. 1-1) There is a significant relationship between intellectual capital and Return on Assets.1-2) There is a significant relationship between intellectual capital and Asset Turnover ratio. 1-3) There is a significant relationship between intellectual capital and Market to book value ratio. 2) There is a significant relationship between a company’s intellectual capital and its future performance. 2-1) There is a significant relationship between intellectual capital and next year Return on Assets. 2-2) There is a significant relationship between intellectual capital and next year Asset Turnover ratio. 2-3) There is a significant relationship between intellectual capital and next year Market to book value ratio. 3) There is a significant relationship between the rate-of-growth of a company’s intellectual capital and company’s future performance. 3-1) There is a significant relationship between the rate-of-growth of intellectual capital and next year Return on Assets. 3-2) There is a significant relationship between the rate-of-growth of intellectual capital and next year Asset Turnover ratio. 3-3) There is a significant relationship between the rate-of-growth of intellectual capital and next year Market to book value ratio. 4) The effects of intellectual capital on a company’s performance will differ by industry.Methods: The variables being considered are: Intellectual capital as the independent variable, Return on Assets, Asset Turnover ratio and Market to book value ratio for performance evaluation (dependent variables); and the control variables are size and debt ratio of the company. In this research, 123 accepted firms in Tehran Stock Exchange, within the period 1380 to 1385 are investigated. For statistical analysis and to test hypothesis, descriptive statistics (mean and standard deviation) and inferential statistics (simple and partial correlation, single and multiple linear regression and analysis of variance) are used. Correlation coefficient and regression are used to test first nine hypotheses and analysis of variance is used in test of tenth hypothesis.Findings: The results of statistical tests within the period 1380 to 1385 show that intellectual capital affects Return on Assets and Asset Turnover ratio of those years significantly and positively, but the effect on Market to book value ratio is not significant. Moreover, the statistical tests reveal that intellectual capital affects the future company performance, positively and significantly. Also, a significant relationship is verified between intellectual capital growth and the future company performance within the next year. Furthermore, the difference of the effects of intellectual capital on the current company's performance in various industries is also concluded from the present study, which is due to the different effects of intellectual capital on Return on Assets and Asset Turnover ratio.Discussion and Conclusion: Intellectual capital is considered in this study as a strategic, intangible asset. According to the resource-based view, it should be associated with the above-median sample performance. The result of this study support the resource-based view. The results confirm hypotheses, and show that intellectual capital has positive effects on current and next year performance. Indeed, only the effects of intellectual capital on current year market-to-book ratio are not significant. One of the probable reasons for this, is inefficiency of Tehran Stock Exchange, because the result of sixth hypothesis indicate that the association between intellectual capital and next year Market to book value ratio is significant. In other words, it seems that market reflects the effects of intellectual capital on stock price, with a delay. As a general rule, the results point to the usefulness of intangible in general and intellectual capital in particular as a sustainable source of superior wealth creation.

Introduction Independent auditing increases investors’ confidence and reliance to financial reporting systems and financial markets and decreases risk of investor’s decision making about financial information. Independent auditing increases efficiency of financial market which means independent auditing is the basis of capital markets.Research Hypothesis: In this research we investigate Iranian certified public accountant’s perceptions of “Auditor Indepencence”. We have identified five effective factors on Auditor Indepence, including; non-audit services, overdue fee, management control on choice, substitution and fee of auditors, acceptance of gift, hospitally or discount of client, long association of auditors with a specified client and Auditor economical depencence to a client as independence decreasing Factors. Methods: With regard to using of questionnaires, we have applied nonparametric method, chi square… methods. Results: Results show that the exanimed Factors have been confirmed in the predicted ways. In most cases there is a difference between CPA perceptions in theory and present conditions. Discussion and Conclusion: According to the results, we suggest that broader ethical codes should be provided, and more over we have given some suggestions about replacing auditors, increasing stock market rules about independence, auditing firms monitoring on the independence, creating audit committees, omission and reducing economical dependence (%10), omission management control on choice substitution and Fee of A ditors.

Introduction: There has been a considerable discussion in the academic literature about the principal-agent problem that arises from the separation of ownership and control (for example, Jensen and Meckling, 1976). Serving as the impetus to such recent U. K. regulations as the Cadbury report of 1990 or U. S. regulations as the Sarbanes-Oxley act of 2002 are considered to be the most important corporate governance regulation in the past 70 years. The Organization for Economic Co-operation and Development (OECD), published a set of corporate-governance standards and guidelines covering six major areas to increase regulation's power and cooperative & integration of countries regulations: 1) Increasing of thrusts of Corporate governance frames 2) The rights of shareholders 3) The equitable treatment of shareholders 4) The role of stakeholders in corporate governance 5) Disclosure and transparency 6) The responsibilities of the board (OECD, 1999a(.All of the above standards can affect corporate governance system.One of the most important dimensions of corporate governance is board composition. Based on the agency theory, non executive directors contribute to decrease interest adverse between stakeholders and company management. Non executive directors' thorough independent vote could have a control role in the company.The other most important corporate governance aspect is information disclosures. Financial information disclosure as EPS accurately and on time can contribute to solve agency problem.Ownership structure is third functions of corporate governance affecting firm's performance. In this article we test the relationship between corporate governance dimensions (including board composition, owner structure, the information disclosure and firm's performance.Methodology: Our purpose is to determine the relationship between corporate governance dimensions and firm's performance within 77 listed companies in Tehran Stock Exchange during 1382 to 1384 (Iranian calendar(.There are 3 kinds of variables:1) Dependent variables performance rank=1/income growth rank + 1/net profit growth rank + 1/operational profit growth rank + 1/rank ROA + 1/rank ROEThe dependent variable is firm's financial performance that is the function of income growth, operational profit growth; net profit growth, return on asset (ROA) and return on equity (ROE). Our samples which are Company are ranked based on functions ranks as bellow formula: 2) Independent variables the independent variables include board composition, ownership structure and the information disclosure level. Index of board composition is non executive directors to whole of directors' ratio. We first compute these ratios for 77 samples companies then, we rank sample companies based on ratio results.Index of ownership structure is free float stock based on data obtained from Tehran Stock Exchange. After determining free float stock of sample companies we then rank these companies based on results. At least we compute information disclosure degree of samples.3) Control variables Firm size and financial leverage are the control variables. Size defined as total assets of company and financial leverage defined as total liabilities to equity.We first correlate financial performance with independent variables without control variables using Spearman correlation. We then enter control variables to equality and test the relationship between financial performance and independent variables using chi- square.Hypotheses: In this research we test the relationship between firm's financial performance and corporate governance dimensions. To determine this relationship we define three hypotheses: 1) There is a meaningful relationship between firm performance and board composition.2) There is a meaningful relationship between firm performance and ownership structure. 3) There is a meaningful relationship between firm performance and information disclosure.Results: The results of this study show that there is no meaningful relationship between board composition, ownership structure and firm performance whereas there is a meaningful relationship between information disclosures and firm's performance.Conclusion: Based on the results we find that information disclosure affects the firm's financial performance; so we propose listed companies must predict profit accurately and the stock exchange must have a system to get financial information.

Introduction: The mitigation of the information asymmetries between managers and owners via unexpected changes in dividend policy is the cornerstone of dividend signaling models. The information asymmetries hypothesis states that managers have inside information about the future performance of firm. They signal inside information by changes dividend policy. Dividend signaling hypothesis predicts that dividend changes convey information about the firm's future earnings. For example, an unexpected dividend increase may signal investors that a firm's directors are more optimistic about future profits than previously thought. Signaling models have two key empirical implications, first dividend changes should be followed by price changes in the same direction. Second, the models predict a positive relation between dividend changes and subsequent operating performance of the firm. The current view in the literature is that dividend changes convey information mainly about past and current earnings. This paper focused on second prediction of signaling models.Hypothesis: In order to provide evidence about if changes in dividend convey information of future earnings, main hypothesis to be tested is that: H 1: The changes of dividend will be positively correlated with the unexpected earnings. So, we expect b1 to be positive and significantly different from zero in the following model: UE j, t = b 0+bDDIV j, t-1 +e j, t-1 (1)In estimated the model in equation (1), we control for the return on equity that are expected to affect unexpected earnings. UE j, t = b 0 +b 1 DDIV j, t-1 +ROE j, t +e j, t-1 (2)Where: (DDIV j, t-1) is the changes in dividend,(UE j, t ) is the unexpected earnings,(ROA j, t) is the return on equity.In this paper DDIV and UE are measured by following models: DDIV j, t = DIV j, t- DIV j, t-1 /DIV j, t-1 , UE j, t = (E t – E t-1)/BV j, t-1 Methods: The sample includes 60 production firms listed in Tehran Stock Exchange (TES) whose data are available between 1378 and 1385. Financial firms and firms that changed fiscal year end during the test period are excluded from sample. We used cross-section and polling data methods for estimated models. Results: The results of estimated models (1) and (2) in cross-section and polled data methods show that the coefficient of dividend changes is positive and significant. After controlling for return on equity, T-statistics of model (2) is 17.49 and 8.477 respectively for cross-section and polled data that is significant at 1% level. Discussion and Conclusion: Many theoretical models suggest that announcement of dividend increases convey favorable information about future earnings. Prior studies have found evidence that dividend changes and future earnings changes move in the same direction. However, our results provide support for the testable implication of these models. We detect significant relation between dividend changes and future earnings that are similar to results of Nissim and Ziv (2001) and Skinner (2003). These findings provide evidence about dividend signaling in TSE.

Introduction: Capital projects are the most significant factors in creating value in the economy. Providing financial information is quite necessary for the optimal allocation of capital and the accounting system is a very important information source for managers to differentiate the appropriate capital projects from the inappropriate ones. High quality accounting information helps managers to identify the most ideal investment opportunities with the least errors possible (Bushman & Smith, 2001). According to the traditional theory of investment and the theory of Tobin’Q, accounting information do not play a role, but the accounting system provides additional information about investment opportunities beyond market information (Bond et al., 2004; Alti, 2003). The additional information assists in the prediction of final return and holds a significant value for managers in decisions regarding capital projects. The higher the quality of accounting information, the higher the optimality of investment decisions made. In rational decisions, precise information holds more weight and significance and investment decisions have a greater sensitivity towards accounting variables. Research Hypothesis: In the present study, the influence of the quality of accounting information on managers' decision makings was examined. The criterion for identifying the quality of accounting information is the quality of income. For this purpose, the influence of the quality of income as introduced by Dechow and Dichev (2002) on the sensitivity of capitalized expenses to the current year income and its accrual portion has been analyzed upon controlling future operational cash flows and Tobin’Q and the following two hypotheses introduced: First Hypothesis: An increase in the quality of income, results in a change in the sensitivity of next year capital expenses to current year income. Second Hypothesis: An increase in the quality of income, results in a change in the sensitivity of next year capital expenses to the accrual portion of the current year income. Method of Research: Post event inquiry researches have been used in this study (using historical information). Moreover, since the relationship and correlation between variables have been examined using regression equations, research has been classified as a correlative type (Azar & Momeni, 2005). The relationship between the quality of income, accounting income and its components (cash and accrual) with next year capital expenses, were analyzed using the following regression:Invest i, t+1=a+b0. Qi, t+b1. AQi, t. Qi, t+b2. CFOi, t+1+b3. AQi, t. CFOi, t+1+b4. ROAi, t+b5. ROAi, t. AQi, t+b6. AQi, t+e i, t+1 Next year capital expenses (Invest i, t+1) is the dependent variable in the research that has been extracted using the following ratio:Invest i, t+1=DAi, t+1/Ai,tSince, one of the information sources of managers in investment decision makings, is the market (information relating to share prices) and Tobin’Q (Qi, t) is considered one of the criteria in investment decision makings based on market price, it has been utilized as one of the control variable in this research and has been determined according to the equation below: Tobin's Q=Common Shares (Book Value – Market Value) +Book Value of total Assets/Book Value of Assets The other control variable of the research, is future operational cash flows (CFOi, t+1), due to its effects on investment decisions. Information relating to this variable has been extracted from the statement of cash flows. The quality of income is the independent variable in this research and the criteria considered for it has been the quality of all accrual items of the capital working capital computed using the following regression equation (Dechow and Dichev, 2002; Mc. Nichols, 2002): TCAi, t=a+b1CFOi, t-1+b2. CFOi, t+b3CFOi, t+1+b4 (D Salesi, t – D Ari, t) +b5PPE i, t+e i, t TCAi, t is the sum of all accrual items in the working capital and has been computed as follows:TCAi, t=DCAi, t - DCLi, t – DCASHi, t+D STDEBTi, t / Average Book Value of All Assets During Years t, t-1 Accounting income (ROAi, t), is a representative of accounting information and is used by managers in investment decision makings. It is the result of dividing net income to total assets. To measure the accrual (ACCRi, t) and cash section (CFOi, t), of income, the relationship between net income, operational cash flows and accrual items were utilized. The accrual section was net income subsequent to operational cash flow deductions divided by the book value of the sum of all assets (Sloan, 1996). Results of Tests: Initially tests relating to the sensitivity of future capital expenses to current year accounting income, future cash flows from operations and Tobin’Q were made and resulted in the following regression equation (Chen, 2005):Invest i, t+1 =a +b0. Q i, t +b 1. CFO i, t+1 +b 2. ROA i, t +e i, t+1 To examine the significance of all resulting coefficients, the t-test was used. Since the significance for each of the coefficients was less than 0.05, coefficients are significant and a relationship exists between the dependent and each of the independent variables. Regression running in tests involving the first hypothesis is as follows (Chen, 2005):Invest i, t+1 =a +b 0. Q i, t +b 1. AQ i, t. Q i, t +b 2. CFO i, t+1 +b 3. AQ i, t. CFO i, t+1 +b 4. ROA i, t +b 5. AQ i, t. ROA i, t +b 6. AQ i, t +e i, t+1 The coefficients relating to CFOi, t-1, CFOi, t+1 and (DSales i, t – DAR i, t) has been positive and negative for CFO i, t and PPE i, t througout the last five years, which conforms to expectations and results obtained in previous researches performed on the quality of income. Results of the tests confirm the first hypothesis. Regression running for tests relating to the second hypothesis is as follows (same source):Invest i, t+1 =a +b 0. Q i, t +b 1. AQ i, t. Q i, t +b 2. CFO i, t+1 +b 3. AQ i, t. CFO i, t+1 +b 4. CFO i, t +b 5. AQ i, t. CFO i, t +b 6. ACCR i, t +b 7. AQ i, t. ACCR i, t +b 8. AQ i, t +e i, t+1 The significance of the coefficients has been examined using t-tests. Results indicate the acceptance of the second hypothesis. Results of the tests confirm the second hypothesis. Conclusion: In this research, the sensitivity of capital expenses to accounting information and its relationship with the quality of income has been examined. The quality of income refers to the ability of the accounting income to precisely reflect the economic income and to be informative about the latter (Chen, 2005). Results of the research reflected that the quality of income has positive influences over the sensitivity of future capital expenses to current accounting income, sensitivity of future capital expenses to future cash flows and Tobin’Q and as the quality of income increases, the sensitivity of future capital expenses to current accounting income increases as well. Moreover the quality of income positively affects the sensitivity of future capital expenses to the accrual portion of current year income, sensitivity of future capital expenses to Tobin’Q and future cash flows from operations. The effects were more evident in the sensitivity of future capital expenses to the accrual portion of income as compared to the cash portion. With the increase in the quality of income, the sensitivity of future capital expenses to the accrual portion of the current year income would increase as well.

Introduction: The use of financial ratios in a variety of performance evaluation and decision-making contexts is an increasingly important area of accounting research and practice. While many of the ratio applications employ methodology that relies on either univariate or multivariate normality assumptions and parametric tests procedures, surprisingly little is known about the distributional properties of financial ratios. In other words, such analyses assume that financial ratios or some transform of them, are normally distributed and satisfy certain stationarity assumptions. Recent empirical research casts doubt on these assumptions, even when the data are transformed and a significant number of outliers are eliminated in an effort to induce normality. In addition, financial ratio distributions could provide us with very important information about the behavior of firms, and they would be worth studying in that context, quite apart from their significance for statistical analysis. Given the limited knowledge concerning the distributional properties of financial ratios and the widespread use of ratios in a variety of decision contexts, more research is clearly needed. Research questions and hypothesis: This study investigates the distributional characteristics of financial ratios and usefulness of deleting outliers and transforming data in normalizing financial ratios. Possessing due information on this area would prove effective in selecting the appropriate statistical instrument. Evidence on the distribution of financial statement numbers would also turn out to be a stimulus to subsequent research that promotes better understanding of the properties of financial statement data. A main area of statistical difficulty in the analysis of financial ratios is that of selecting appropriate techniques with regard to ratio distributions. When financial ratios are used, we assume that the data distribution is normal and use parametric tests. However, there seems not to be sufficient information and this calls for more research studies to be done on this area. Financial ratios can take any of the number of the distributional forms such as the gamma, Chi-square and normal. But normal distribution, among the others, is more appealing to researchers because many statistical tests invoke normality in the tested distribution. For this reason many researchers focus on normality in their analysis of the distribution of financial ratios. Because of this, the main question of this study is that, whether financial ratios follow normal distribution or not and the investigation of the effects of outliers and data transformation on the distributional characteristics of financial ratios. Based on these questions three main hypotheses and twelve minor ones were designed and investigated in the present study. Our sample included 145 companies which selected among the seven big industries of Tehran's Stock Exchange. Methods: The present study makes use of kolmogorov- Smironov and Shapiro- Wilk tests for testing the hypothesis for the sample in the period between 1380-1384. We use Chebyshev’s inequality for identifying and deleting the outliers and log normal, cube root and square root methods for data transformation. The initial data analysis involved investigating the histograms of each ratio and various statistics such as the mean, the median, the range, the standard deviation, the upper and lower ten percentiles, and the skewness and kurtosis coefficients. This analysis was performed on the complete and reduced data sets (that is, after deleting outliers) and after transforming data. Our sample included 145 companies which selected among the seven big industries of Tehran's Stock Exchange. Our sample is restricted to only those companies with the same year end. Results: The result of this paper shows that assumption of normality for financial accounting ratios weren’t reasonable and acceptable. Even after deleting the outliers and transforming data, no normal distribution of financial ratios was observed. Nevertheless, deleting the outliers and data transformation had a great impact on the reduction of skewness and kurtosis coefficient of financial ratios and made the financial distribution nearer to normal distribution. Discussion and Conclusion: The aim of this paper is to provide empirical evidence on the statistical distributions of financial ratios. Evidence on this area is important because it guides the choice of statistical tools. Empirical evidence for the distribution of financial ratios seems to indicate non-normality caused by varying degree of skewness and the existence of extreme outliers. But even after deleting the outliers and transforming data, no normal distribution of financial ratios was observed. In other words ratios are not distributed normally in raw, truncated or transformed forms, but deleting outliers and transformation improve goodness- of- fit to the normal distribution. There are a number of reasons why distributions of financial ratios cannot be normal. The first is that it is in fact a distribution of the quotient of two variables, which have their own distribution, does not lead to normal distribution. The second reason is that there will, most of the time, be outside pressure on firm management to keep at least some of the ratios within certain acceptable limits. The third reason is that a number of ratios do not have a range of possible scores of (-¥, +¥) but possess a lower bound of zero, which may lead to skewness. One approach to deal with lack of normality is to explore the exact distribution of the ratios used in particular models and to use specially shaped statistical tests and tools which are convenient to the emerging distributions. Another alternative would be to develop methods that are based on distribution- free statistical theories

Introduction: The main objective of financial reporting is to provide the necessary information for decision making. For so doing, there is a need for the proper disclosure of financial and other related, reliable and comparable information about the economic activities of a company. A great deal of research has been conducted on the subject of accounting changes and their effect on financial disclosure in different countries. In 1970s and 1980s, the approach of research on accounting changes shifted to descriptive with the aim of investigating the effects of state benefits, markets and other public conventions on the degree of financial disclosures in financial reports. One of the aspects which came to be at the center of attention in such kinds of research was the investigation of political and economic outcomes as results of selecting different accounting policies. Over the past decade, some research has been done (e. g. , Jaggi and Low, 2000; Chow et al., 2001; Hope 2003; and Doupink and Riccio 2006) to investigate the impact of environmental factors on accounting principles and policies in different countries. In these research, concepts like distrust, individualism, patriarchy, and power distance are considered important social constructs and thus effective on the current accounting systems in different countries. The reason is that accounting, as a social-technical activity, is related to human and natural resources and the interaction of these two. According to Parra (1989) though the technical aspect of accounting, with respect to the human aspect, has less relation with environmental factors like social constructs, yet because of the existing interaction between the two aspects, the technical aspect of accounting cannot to be investigated without regard to the effective environmental factors (42). According to Ahmadi (1382), social constructs consist of people’s opinion, gender, academic major of the financial managers, control power, information power, reward power, legalism, illegality, individualism, advertisement, collectivism, reliance demanding, conservatism, secrecy, distrust, and stubbornness. One of the most important reasons for doing research to investigate the impact of environmental factors like social and cultural constructs on accounting and disclosure is – if evidence proving the relationship between the two is found-the necessity to reconsider and modify the target accounting policies for disclosure in accordance with the social constructs influencing it. Therefore, the question of this study is whether the social construct such as legalism, reliance demanding, education, individualism, gender, academic major of the financial managers, and career experience are effective on the financial disclosure of the companies accepted in Tehran Stock Exchange.Research hypotheses: According to the theoretical model, the question of this study was designed and tested in the form of seven hypotheses:1. There is a meaningful relationship between legalism and financial disclosure. 2. There is a meaningful relationship between reliance demanding and financial disclosure. 3. Different educational levels are different in disclosure. 4. There is a meaningful relationship between individualism and financial disclosure. 5. There is meaningful difference between male and female managers in their disclosure. 6. There is meaningful difference between disclosure and the academic major of the financial managers. 7. There is a meaningful relationship between the career experience of the managers and their disclosure.Research Methodology: This research is conducted through survey. In the theoretical phase, the necessary information for the survey was gathered through reference to books, magazines and internet databases. In the field phase, however, a questionnaire of 5 general and 55 specific questions was used. The specific questions of the questionnaire were those of the closed and conditioned and have been adapted in accordance with the Likert Spectrum. In order to gain logical certainty of the validity of the questionnaire, in addition to the comments by specialists of the field, a pretest was used. The questionnaire was distributed among 20 people of the statistical society, who had been randomly selected, and the questionnaire was modified according to the suggestions made by this group. In order to evaluate the reliability of the questionnaire, the α-Cronbach test was used. The calculated α-Cronbach was 0.78, and therefore none of the questions of the questionnaire was left out. The statistical population of the study was the financial managers of different companies constituting the Tehran Stock Exchange. In 1385, the number of the companies constituting the Tehran Stock Exchange was 323. In order to determine the volume of the sample, the Kookran formula was applied, and the number of the sample companies was calculated to 81. Furthermore, to choose the sample from the total population, the classified sampling method was used. In order to analyze the data obtained by the questionnaire, descriptive and inductive statistical methods were used. In order for the qualitative analysis of the general information obtained from the questions of the first part of the questionnaire, there were use of classification and organization of the information, relative frequency distribution, absolute frequency distribution and numerical average. For testing the hypotheses of the study, statistical tests like, Pearson’s correlation coefficient and variance analysis were used. SPSS was used for the data analysis and conducting the above statistical tests. Results: The results from the calculation of Pearson’s correlation coefficient for the 1st, 2nd and 4th hypothesis revealed a high correlation between the variables of the mentioned hypotheses and financial disclosure. Therefore, legalism, reliance demanding and individualism have a meaningful statistical relationship with financial disclosure. The results from the calculation of the coefficients of the regression model show that legalism (with the coefficient of 1.53), reliance demanding (with the coefficient of 1.448), and individualism (with the coefficient of 2.148), the models of which are as follows, exercise a meaningful and direct impact on financial disclosure: financial disclosure=51.533+1.53 (Legalism) financial disclosure=1.448+ (DR) financial disclosure=63.855+2.148 (Individualism) The results from variance analysis of the hypotheses 1st, 2nd, 3rd, 4th and 7th show that the variables of legalism, reliance demanding and individualism have impacts on financial disclosure, while variables like degree of education (the third hypothesis) and managers’ career experience (the seventh hypothesis) exert no impact on financial disclosure. To test the 5th and the 6th hypotheses, a free-sample T-test approach was picked up. Results from testing the 5th hypothesis show that there is no actual difference between males and females with regard to their financial disclosure. Results also show that there is no significant difference between people from different educational majors in their financial disclosure. Therefore, gender and the academic major of the financial managers exert no impact on financial disclosure either. On the basis of the accepted hypotheses of the study, below, an experimental model is suggested in which individualism, legalism and reliance demanding are independent variables and disclosure is the dependant variable: disclosure=b0+b1 (individualism)+ b2 (DR)+b3 (legalism) Therefore, using the obtained information from the results of the study, the final adjusted model of financial disclosure is as follows:disclosure=1.548 individualism+0.716 DR+0.689 legalism+eThe results also show that the variable of individualism has the biggest impact on financial disclosure. After that, legalism and reliance demanding have respectively the most impacts on financial disclosure. In addition, results from the multi-variance analysis show that the multi-regression model is a good model to describe the type and quality of the relationship between legalism, reliance demanding and individualism, and financial disclosure. Conclusion: Results from testing the hypotheses of the study show that social constructs of legalism, reliance demanding and individualism have direct and significant impact on the financial disclosure of the companies of the study. However the other social constructs-level of education, gender, the academic major of the financial managers and experience-have no impact on the financial disclosure of the aforementioned companies. The results also show that individualism has the highest impact on financial disclosure. Considering the significance of financial disclosure on people’s decision making and with reference to the results from the present study, the following suggestions are made:1. Considering the impact of individualism on financial disclosure, before employing managers, psychological tests should be conducted to evaluate the characteristics of managers, and managers who would do more disclosures on companies should be employed. This procedure is presently being followed by companies like Hamkaaraan System. 2. With regard to the impact of legalism on financial disclosure, Tehran Stock Exchange should implant general regulations for the financial disclosure of its accepted companies. 3. An organization should be established to rank companies according to the degree of their financial disclosure. This can be a great help to investors. As part of their public information plan, those in charge of capital markets can calculate the degree of the financial disclosure of different companies in different periods according to the model and use it as a criterion for decision making of their users of financial reports through their monthly and yearly Stock Exchange magazines.

Introduction: Dealers' decisions in capital markets are based on risk-return combination. Without attention to type and method of investment, two factors, investor prediction about recoverable earnings of investment and real profits of investment, are an important dimension of financial decision making. Many researches have examined the relationship between financial information and stock return. The conclusions of other researches account for the relationship between stock return and some non-financial information. Liquidity measures such as bid-ask spread, share turnover, rial trading volume, number of trades, and percentage of days that trades occur would have the relationship with firms' stock return. Most of the investors (with short run investment horizon) prefer liquid stocks than non liquid stocks. The purpose of liquidity is only a facility in buying and selling a given asset. Number of daily traded shares, number of daily traded firms, daily traded share value, and percentage of trading volume over total value of the market, number of buyers and number of buying are some measures of liquidity. Yang Hu (1997) tries to find a widely accessible measure of liquidity and studies its impact on asset pricing. Using trading turnover as a measure of liquidity and the 1976-1993 Tokyo Stock Exchange data, He finds that, cross sectionally, stocks with higher turnover tend to have a lower expected return. This evidence is consistent with predictions derived from an Amihud-Mendelson type of transaction cost model in which the turnover measures investors’ trading frequency. The trading frequency hypothesis also predicts that the cross-sectional expected return is a concave function of the turnover and the time-series expected return is an increasing function of the turnover. In an Amihud-Mendelson type of model, assets have different transaction costs and investors have different trading frequencies. Research Questions or hypothesis: The hypotheses of this research are as follows:1. There is a significant relationship between annual stock return and Bid-Ask spread in Tehran Stock Exchange. 2. There is a significant relationship between annual stock return and number of daily trades in Tehran Stock Exchange. 3. There is a significant relationship between annual stock return and percentage of the days that trades occur in Tehran Stock Exchange. 4. There is a significant relationship between annual stock return and rial trading volume in Tehran Stock Exchange. 5. There is a significant relationship between annual stock return and daily trading turnover in Tehran Stock Exchange.Methods: This research is of descriptive-correlative type. The simple regression method is used to examine the hypotheses. We use panel data regression to examine the hypotheses. All models are examined at the 0.05 level or better. All the examinations for the total independent variables are performed separately but the conclusions are represented totally in the table.Measuring the variables: Annual stock return: Annual stock return is the difference between share price at the end of the period and share price at the beginning of the period plus other proceeds of buying share such as: benefits of preemptive right, stock dividend, and dividend payouts over stock price at the beginning of the period. Kt= (-P t – P t-1 ) +D t+ (p t – p n ) *N c /N t +N e *P 1 /N t )/P t-1Where: Kt= Total stock return relative to first price Pt=Stock price at the end of the year Pt-1=Stock price at the beginning of the year Pn=Par value of stock Dt=Gross dividend payout Ne=Number of increased shares by unexpended appropriation or retained earnings Nc=Number of increased shares by contributions Nt=Number of shares before increasing capital Relative bid-ask spread (BA): Bid-Ask spread that is used in this research calculated by following formula that has been used by Amihud and Mendelson (1986) and is as follows:BAi=AP-BP/AP+BP/2i=the examined sampleBA=Average of daily Relative bid-ask spreadsAP=the best ask price for firm (i) per dayBP=the best bid price for firm (i) per dayercentage of days that trades occur (PDT): Number of days that occurs at least one trade over total trading days in the period Daily trading turnover (DTU): Average of daily trading volume over weighted average of number of outstanding sharesRial trading volume for per day (RTV): Average of daily rial trading volume in the periodFinancial information of the firms that are listed on Tehran Stock Exchange (TSE) extracted of financial reporting, week books and yearbooks of TSE and COMPUSTAT data for stocks listed on Tehran Stock Exchange. 156 sample firms for a six years period are selected. These firms were selected with attention to the following measures:1-The required financial and non-financial information of the firms should be available. 2-The firms shouldn’t change their financial year during sample period. 3-The firms shouldn’t have cessation of operations4-Number of trades of the firms shouldn’t be fewer than 100 times in the year. 5-Investing firms eliminated of the sample firms. We used of panel data regression to examine the hypotheses. We examine the hypotheses by panel data regressions for the period thorough 1381-1386. The models of the research are as follows: SRE=b0 +b1X i +e H 0: b1 =0 H 1: b1 ¹ 0WhereSRE is dependent variables and is the independent variable includes BA, NDT, PDT, RTV, and DTU, and b0 is the intercept terms, If H0 is rejected, H1 will be accepted. Accepting H1 accounts for a significant relationship between SRE and given independent variable that is used in the test.Results: The selected approach to examine the hypotheses is panel data regression. The conclusions of panel data regression for the period 1381-1386 indicate that there is no important significant relationship between annual stock return and liquidity measures. Bid-Ask spread as an important measure of liquidity measures has negative and insignificant relationship with Annual Stock Return.Discussion and Conclusion: Findings of panel data regressions for the period 1381-1386 indicate that there are no significant relationships between Annual Stock Return and independent variables. Bid-Ask spread that in many researches is an important measure of liquidity, in this research has no significant relationship with Annual Stock Return. Petersen and Fialkowski (1994) find that less than 50% of trades on the NYSE actually occurs at the quoted bid or ask. Yang Hu (1997) indicates that the commonly used quoted spread data does not measure the actual transaction cost (Hu, 1997). Taking into account the price change after the trade, Huang and Stoll (1996) estimate the correlation between the realized spread and the quoted spread is insignificant. The results of this research like that of Yang Hu (1997) indicate that liquidity measures are not suitable determinants for stock return.

Introduction: With the separation of ownership from management and after emerging the "agency theory" (Baiman, 1982; Namazi, 1985), performance evaluation has been profound as one of the most significant topics in management accounting. In this regard, different approaches have been devised. The major aims of this research are: 1) investigating the Tobin's Q applications among companies accepted in Tehran Security Exchange (TSE) market, 2) determining the relationship between the Tobin's Q ratio with other performance criteria, and 3) comparing the employement of the Tobin's Q in different industries.Research hypothesisGiven the purpose of the study, and following Foster (1986) and related literature (e. g. , Bharadwaj, et al.1999, Chin, et al.2006), the following hypothesis are presented:1. TSE firms are currently employing the "Tobin's Q" ratio for their performance evaluations. Liquidity ratios2. A significant relationship exists between the "Tobin's Q" ratio and the "current ratio". 3. A significant relationship exists between the "Tobin's Q" ratio and the "quick ratio". Turnover ratios 4. A significant relationship exists between the "Tobin's Q" ratio and the "asset turnover" ratio. Profitability ratios5. A significant relationship exists between the "Tobin's Q" ratio and the "earnings per share". 6. A significant relationship exists between the "Tobin's Q" ratio and the "return on assets". 7. A significant relationship exists between the "Tobin's Q" ratio and the "residual income". 8. A significant relationship exists between the "Tobin's Q" ratio and the "sales growth". 9. A significant relationship exists between the "Tobin's Q" ratio and the "profit growth". Other issues 10. A significant relationship exists between the "Tobin's Q" ratio and the "operating profit". 11. A significant relationship exists between the "Tobin's Q" ratio and the "sales". 12. A significant relationship exists between the "Tobin's Q" ratio and the "price of the firm's stocks". 13. The amount of the "Tobin's Q" ratio is different in various industries.Methods: This study is based upon the "Survey research", and the "Content-analysis" (Smith, 2003). The amount of the sales, gross operating profits, earnings per share, return on assets, assets turnover, residual income, stock prices, sales growth, profit growth, current ratio, and quick ratio were employed as independent variables, and their values were calculated based upon appropriate formulas reflected in the literature. Due to the information limitations of the TSE, and among different versions of the Tobin's Q ratio, the simple Tobin's Q formula was exerted (Leewillen and Badernet, 1997: 80). The population of the study consists of all TSE firms that were operating actively during 2001-2005. Totally, 78 firms, that were qualified, were found among 39 different industries. Due to the lack of complete information and discrepancies, all qualified firms were grouped into 15 industries based upon their assimilated information. The required data were gathered via relevant persian and foreign books, articles, and publications (e. g. , Kaplan & Norton, 2001; Horngren et al.2006, Namazi, 2002 & 2003). In order to test the first hypothesis, first pilot interviews were made, and then by preparing an appropriate questionnaire, the necessary information were gathered. The validity of the questioner was tested by the "face-validity" criterion and by and it's value was at 87%. The reliability of the questionnaire was tested by "cronbach's alpha" and it's value was at 93%. For testing hypothesis 2 through 13, the required data were gathered from published data in the TSE market, weekly reports, monthly reports, and Dena, Sahra and Tadbir Pardaz Computer packages. consequentely, the regression analysis technique was employed for testing the second through the 13th hypothesis for different industries.Results: The result of the first hypothesis indicates that the Tobin's Q ratio is not currently being employed by the TSE firms. This finding is contrary to the results of the foreign studies including Mark (1988), Demsetz and Villalonga (2000) and Wolfe (2003). The strong emphasis on exerting traditional accounting ratios, and lack of the familiarity with the Tobin's Q mechanism, are major imputes for not adopting this Tobin's Q ratio. The findings of this study also indicate that, among the prevalent performance evaluation techniques, 1) operating profit, 2) net profit, and 3) total income are the most dominant evaluation measures among the TSE firms respectively. The major reasons for applying these measures are the familiarity of managers and accountants with respect to these concepts, and the availability of required data via the financial statements reporting. The results of this study also reveals that there is no significant relationship between the Tobin's Q ratio and gross operating profit, sales, assets return, sales growth, profit growth, current ratio, and quick ratio.Discussion & Conclusion: It seems like the utilization of the historical cost axioms in computing the current ratio, quick ratio, and assets turnover, a high inflation rate of the economy, and using the accrual accounting basis in calculating the gross profit and sales are major imputes that are responsible for the emergence of such results. When aforementioned results, however, are considered for each of the years 2001-2005 individually, the results are slightly different for 2001 and 2005. This finding could be related to volatility of the stock market during those years. These conclusions are also consistent with the findings of Arcelus, et al. (2005) and Landsman and Shapiro (1995), and since such a study has not been conducted in Iran, no comparison can be attempted internally. Finally, the statistical results enunicated that when the Tobin's Q ratio is exerted, there is no significant differences between the average of the Tobin's Q in various industries. However, the automobile industry demonstrated the highest amount of the Tobin's Q among various industries. This might be attributed to the size of the related companies and their leading industry.