JOURNAL OF ACCOUNTING KNOWLEDGE
Year:2017 | Volume:8 | Issue:2 (29) |Papers Count:9

This study examined the relationship between audit tenure and audit quality in companies listed in the Tehran Stock Exchange, TSE. The Ability of beating earnings forecast and abnormal working capital accruals were used as proxies for audit quality. The audit tenure in this study is taken with at least seven years that seems suitable for explaining audit tenure. This variable is taken as dummy variable in the regression model. All companies listed in the TSE in the period 2006 to 2011 were considered the statistical population. In this study, the panel regression approach has been used for data analysis and processing. Findings showed that audit tenure is not correlated with the ability of beating earnings forecast and abnormal working capital accruals.

This study aimed to investigate the effectiveness of capital market cycle on behavior of financial distress predicting patterns. In this study, the information of 211 distressed firms, selected by certain distress criteria, along with 211 healthy firms listed in the Tehran Stock Exchange in the period 2006-2015 have been used. The model estimation by the use of 35 selected indices in the two periods of capital market recession and expansion was carried out. In this study, Hodrich-Prescott Filter for determining capital market cycle and Logistic Regression and Support Vector Machine models for predicting financial distress were used. The results showed that the behavior of financial distress predicting patterns are influenced by capital market cyclical variation in recession and expansion periods, but the influences are different in application of explaining variables and in predicting ability in the periods of recession and expansion. Also, the prediction ability in Support Vector Machine model is more than that in Logistic Regression model.

This study aimed to investigate the relationship between audit committee quality and cash holdings level. In this study, the ratio of Ozkan and Ozkan (2004) was used for measuring cash holdings, and the suggested variables of Pearson and Rohana (2014), and of Hisham (2014) were used for determining the quality of audit committee. The research period spans 5 years from 2011 to 2015 and the sample size includes 131 companies listed in the Tehran Stock Exchange. The ordinary least squares method was used to test the research hypotheses. Findings from hypotheses tests showed that after adjusting the control variables there were significant positive relationships between the indicators of independence of audit committee, specialty of the members of audit committee, the size of audit committee and the number of meetings of audit committee and the measure of level of cash holdings of company. The results indicated that independence of audit committee had the largest impact and size of audit committee had the smallest impact on cash holdings. Hence, with regard to the findings, it could be declared that increase in company's audit committee quality raises the level of and management ability of cash holdings. As a result, it is suggested that companies to increase cash holdings to protect themselves from background risks need to realize the importance of audit committee quality.

This research aimed to raise awareness of the fundamental questions regarding cost of research and development as powerful instrument for profit management in business cycle and economic fluctuations, and that this may affect audit fees. This study examined the relationship between cost of R&D and cost of audit services in firms listed in the Tehran Stock Exchange. Also, this research assessed the effects of profit management on the relationship between R&D and audit services costs. The study sample includes 48 companies listed in the Tehran Stock Exchange in the period 2004 to 2015. Multiple regression method was used to test the research hypotheses, regarding panel data processing approach. Findings showed that R&D costs have significant positive relationship with audit fees. Additionally, earnings management strengthens such a relationship. Finally, this supports increasingly the hypothesis that corporate executives to do earnings management expand capital costs or spend research and development funds in recurrent costs.

According to the life cycle theory, firms, like living organisms, pass through a series of predictable patterns of development, and recognition of firms’ life cycle stages has important implications for understanding firms’ financial performances. This study aimed to assess the question that whether capital cost varies over the life cycle of firm, or not. In other words, how much capital costs could be affected by life cycle stages? Using a sample of 124 firms between 2007 and 2015, we observed variation of cost of equity capital over the life cycle of firms. In this study, firms’ life cycle were measured by Dickinson’ s (2011) and DeAngelo (2006) models, and the same as earlier studies, cost of equity were estimated by the implied approaches, in particular, Easton (2004) and Ohlson and Juettner-Nauroth (2005) models. Findings showed that cost of equity is higher in beginning and in decline stages, and lower in growth and in mature stages. When DeAngelo (2006) life cycle measure (the ratio of retained earnings to total assets) was used, the findings indicated that cost of equity decreases as the ratio measure increases.

Rational investors try to decide based on risk and return. Acceptable level of risk for investor may be affected by investor’ s professionalism and style of decision making. Patterns of decision making suggest cognitive styles and educated behaviors arising from fundamental differences in individuals in collecting information and propensity to use the information in decision making. All investment decisions are made based on the relationship between risk and expected returns. This study examined the effects of professionalism on cognitive style and propensity to risk of investor, and controlling his decision making pattern at the same time. This study is a quasi-laboratory one for hypotheses testing, and a research of descriptive-deductive type. This study uses a single year cross section data in 1392, with statistical sample of 150 individuals from the population of professional and non-professional analysts. Findings showed that there is significant positive relationship between professionalism and investors’ risk perception and risk propensity. Also, other findings indicated that there are not significant differences in the average financial and economic knowledge of investors for the investors with guideline style, analytical style, cognitive style and behavioral style for decision making. In addition, gender of investors does not affect investors’ acceptable rate of risks.

Companies in their economic life face various factors that are unpredictable. Companies’ directors, make the required final decisions. Manager needs to have ability to identify company’ s position and certain characteristics to make best decisions based on his/her own knowledge. One of the most important decisions is that relating to company financing. This study examined the effects of management ability on the financing policies of companies. This was followed by analyzing financial statements of 133 companies in the years 2010-2015. To assess the ability of management, the pattern introduced by Demirjian (2012) was used, and to calculate financing policy, the three variables of financial leverage, debt maturity and level of cash holdings were used. The findings showed that management ability has significant positive relationship only with financial leverage that implies managers with high ability of management capacity tend to use financial leverage to make profitable investments and to demonstrate their high potential.