JOURNAL OF ACCOUNTING KNOWLEDGE
Year:2015 | Volume:6 | Issue:21|Papers Count:8

It is important to understand the factors that affect audit report delay, since this directly affects the timeliness of financial reporting, which is one of the most important qualitative attributes of financial statements. Old accounting information has not worth in the economic and financial decisions. This paper investigated the relationship between effectiveness of the audit quality (in terms of auditor change, auditor industry specialization and type of auditor’s report) and reduction of audit report delay for the companies listed in the Tehran Stock Exchange.In this study, the sample consists of 64 companies in the period 2005-2012, and for testing the hypothesis the statistical panel data regression was used. The results showed that there is a positive and significant relationship between types of auditor’s report with audit report delay. That is, audit report delay is higher for receiving qualified audit report. Also, the results showed that there is not a significant relationship between either auditor change or auditor industry specialization and audit report delay. That is, auditor change and auditor industry specialization do not lead to reduction in audit report delay.

Earnings smoothing is affected significantly by expectations about future earnings, and overconfidence affects such expectations. Overconfident managers by the belief that they possess special information (that the others do not) overestimate their information integrity and consequently their firms’ future earnings and cash flows, and usually have positive perspective on firm’s future risks and returns. This study investigates the impact of managerial overconfidence on earnings smoothing.The statistical population for this study consists of companies listed in the Tehran Stock Exchange between the years 2009 and 2013. To measure overconfidence, two criteria are defined that are based on investment decisions. Earnings smoothing is measured by the ratio of standard deviation of operating earnings to standard deviation of operating cash flow, both based on adjusted total assets. The results from research indicated a significant positive relationship between managerial overconfidence and earnings smoothing. Also, the results showed in the firms with higher systematic risk, the probability of earnings smoothing is more.

Earnings management has negative impact on the transparency of financial information, and leads to decreasing the quality of financial reporting process. Earnings management can be limited by corporate governance. Legal supervision is one of the outside strategies for corporate governance and responsibility, which has an undeniable role in confronting such situations. Thus, the objective of this study is investigating the role of Security Market Act as supervisory process over capital market in Iran, in opposition to earnings management (accrual-based and real earnings management). To investigate this issue, discretionary accruals and a combination of abnormal cash flow (from operations, abnormal product expenses and abnormal discretionary expenses) have been considered as proxies for accrual-based earnings management and real earnings management, respectively. The collected data from a sample of 97 companies, listed in the Tehran Stock Exchange in the years 2001 to 2010, was analyzed by multiple regression analysis. The results indicated that there are a significant and negative relationship between accrual-based earnings management and Security Market Act, and a significant and positive relationship between real earning management and this Act.

The objective of this research is to investigate the reaction of market to the companies’ bad or good news, according to their earnings forecast in the last year, the managers’ inclination to keep or improve their fame in forecasting, and comparing managers'' inclination towards upward earnings management with different types of earnings management and with respect to their last year forecast. To achieve this, the financial statements of 86 companies listed in the Tehran Stock Exchange between the years 1384-1390 were analyzed. To reach the research objective, the companies were categorized according to their last and current year forecasts, and their forecast contents.Then, considering the combined structure of the data, and using the statistical tests as T test, correlative coefficient of Pierson, and OLS, the hypotheses of the research were tested. The results showed that the market reaction to the earnings forecast with good (bad) news, when the last period forecast was optimistic (pessimistic), is more positive (more negative) than when the last period forecastis pessimistic (optimistic). Also, the results showed managers tend to be stable in earnings forecast. Additionally, the results showed the last period optimistic forecast could be considered the factor leading to upward earnings management in the current period.

Information asymmetry leads to formation of inefficient information. This inefficiency may affect firm’s performance. One of the main advantages of business groups is lowering the levels of information asymmetry. This study aims at investigating the effect of information asymmetry on performance in business group.To test the research hypothesis, 1395 year-companies from listed companies in the Tehran Stock Exchange in a 10 financial year from 1382 to 1391have been studied. The results indicated that there exists a negative relationship between information asymmetry and the rate of return on assets (ROA) (firm performance). Also, the results showed that firms in business groups have higher ROA than independent firms. Additionally, the firms in variety business groups have higher ROA than the firms in the other business groups. The other findings indicated that the level of information asymmetry in the firms affiliated with business groups is less than that in the independent firms. Also, the rate of information asymmetry in the firms in variety business groups is lower than that in the firms affiliated with the other business groups.

This study investigates the effects of product market competition on earnings quality in 131 companies listed in the Tehran stock exchange in the context of 17 industries during 1385-1391. First, in order to provide a better assessment of the market competition, 8 common indicators were used. Then, using the factor analysis technique, these indicators were summarized in the three factors of potential competition (from entry thread of new competitors to the market), existing competition (from existing rivals) and industry profitability. Using panel and pooled data regressions, the research hypotheses were tested.Results indicated that there is not a significant relationship between existing competition and earnings quality, but, there is a significant and positive relationship between potential competition and earnings quality. In other words, when the entry thread of new competitors to market increases, the existing firms in the market are forced to report earnings at high quality by reduction in earnings management, including manipulation of accruals and real activities. This increases the predictability of earnings. However, the reduction in earnings management incentives does not mean absence of earnings manipulation, rather the least earnings manipulation by firms in the industries continues to create more earnings smoothness for eliminating earnings volatility that improves earnings information content about future cash flows.

One of the most important financial decisions of managers is determining the level of cash holdings. Recent studies find that deviation from the optimal level of cash holdings may reduce the market value of company and its performance. This paper investigates whether accounting conservatism and earnings quality could mitigate the value destruction associated with increase in cash holdings. Furthermore, this study investigates the role of accounting conservatism on marginal value of cash holdings, considering financial constraints.To test the search hypothesis, we used multiple regression analysis and the financial data of 111 sample companies in the period 2001 to 2012.The results indicated that accounting conservatism could mitigate the value destruction associated with an increase in cash holdings. Also, increasing the level of financial constraint reduces the role of accounting conservatism in improvement of market value of cash holdings. Furthermore, the relationship between earnings quality and marginal value of cash holdings is negative.