Journal of Empirical Research in Accounting
Year:2019 | Volume:8 | Issue:2 (30) |Papers Count:15

This research is aimed to identify factors misleading investors in determining future profitability, focusing on good accruals and accruals estimation error. This study is an applied and quantitative research. Also, because of using past information, it is considered asex-post facto research. The sample consists of 78 firms listed in Tehran Stock Exchange during the years 2004 to 2013 and the hypotheses is tested using regression coefficient analysis. Findings show that the cash component of profit is more persistent than all accrual components and also accruals related to growth is the most persistent component of accruals. In addition, the findings show that cash flow and accruals related to growth have a positive relationship with future returns, and accruals related to temporary fluctuations and accruals estimation errors have a negative relationship with the mentioned variable. According to the results, accruals related to temporary fluctuations and accruals estimation errors lead to investors misleading, due to their lower persistency.

The rhetorical use of narratives is important in order to understand quantitative information. However, when there are agency motives, the rhetoric may mislead the reader and thereby be used strategically rather than informative. Writing management or tone management of writing in qualitative texts is choosing the tone of writing as incommensurate with concurrent quantitative information. Similar to the earnings management, tone management may be opportunistically used in order to manipulate user's perceptions of firm fundamentals. In addition to make numbers acceptable, writing management can affect user’ s perceptions by transferring a positive signal. The purpose of this study is to investigate the relationship between writing tone and financial performance as well as experimental test of opportunistic use of writing management and earnings management simultaneously, using data from some firms listed in Tehran Stock Exchange for the period 2008 to 2015. Correlation, multiple linear regression and logistic regression analysis are used to test the hypotheses. The findings show a significant positive relation between writing tone in the report of the Board on the firm's activities and the financial performance. Besides, the results show a positive relation between writing management and earnings management and it is expected that firms use writing management and earnings management simultaneously.

This study reviews The Exposure Draft provided by FASB and IASB about restructuring of financial statements, that is supposed to be the basis for amendments to International Financial Reporting Standards (IFRS). Therefore, the purpose of this research is to compare the value relevance of current and noncurrent assets disaggregated into operating and investing as well as the value relevance of aggregated current and noncurrent assets in traditional balance sheet, with the stock return. The study uses data from 144 firms listed in Tehran Stock Exchange for the years from 2002 to 2014. Also, the asset section of the firms' balance sheet is restructured based on FASB and IASB Exposure Draft. To test the hypotheses, the multivariate regression analysis based on pool data has been used. The results show that the disaggregation process of current, non-current and total asset have significant positive effects on value relevance of balance sheet items to stock return, as compared to the aggregated asset disclosure in traditional balance sheet format.

Overconfidence is one of the most important management characteristics that affects firms' financial policies. When sales decline, overconfident managers being extremely confident of their capabilities to restore previous levels of sale may more likely overestimate sales in the near future and it results in a cost stickiness increase. However, the cost stickiness by manipulating the natural process and expected costs could affect informational content. Therefore, management overconfidence can affect the value relevance through influencing costs stickiness. This study is a causal, post-event and applied research. The sample consists of 74 firms during the years 2005 and 2015. The first hypothesis test findings show a significant positive relation between cost stickiness and management overconfidence and the second hypothesis test findings show a significant negative relation between management overconfidence and value relevance. The third hypothesis of the research about the effect of management overconfidence on the value relevance through the costs stickiness is not verified.

This study examines the effects of client strategy on the relation between the audit quality and audit industry specialization. This study measures the audit industry specialization in the two levels of partner and firm by using Carswell et al (1995) and measures the audit quality using discretionary accruals (adjusted Jones model). According to Yuan et al (2016), this study uses four indexes: capital intensity; tangible fixed assets renovation; financial leverage; and overhead efficiency in order to measure client strategy. This research is an inductive and post-event (using past information) as well as a correlation and descriptive study. The sample consists of 101 firms listed in Tehran Stock Exchange for the period from 2008 to 2015. Data analysis results show that there is a direct relationship between audit industry specialization and audit quality. Also the results show that the direct relationship between audit industry specialization and audit quality is more pronounced when the client strategy has lower deviation from the industry-normal strategies (and Reverse). Also findings show that client strategy deviation has a negative effect on audit quality.

The purpose of this study is to provide a conceptual model for determining the board of directors' compensation of Iranian firms using experts' opinion. The multidimensional nature of management compensation has led to the presentation of various economic and social theories about it. A compensation model should be planned in accordance with the cultural, legal, economic and social characteristics of the country. This research is qualitative and its data has been collected by interview method and analyzed by theme analysis. Results of the research are presented in the form of a conceptual model including factors affecting the board of directors' compensation, relations among the mentioned factors, the application scope, presumptions, constraints and environmental factors. The results of the research show that in order to determine the board of directors' compensation, the extent and conditions of achieving annual goals of the firms and moderating factors should be considered. The annual goals achievement of a firm is influenced by the annual goals of the firm after adjusting for unexpected changes in macroeconomic, industry and firm conditions; the importance of each of the objectives; and the annual performance of the firm after adjusting for major shareholder decisions and fraudulent reporting and illegal actions. The conditions for reaching the annual goals of a firm include a firm size, the industry competition intensity, work difficulties in the industry, liquidity of the firm, changes in firm risk and the probability that the board will be deprived of social rights. Moderating factors include legal constraints, rewards of similar firms, and salaries and benefits paid to the board members.

Today, organizations follow specific financing, investment and liquidity policies with regard to their lifecycle stage. This study investigates firms' financing, investment and liquidity policies at different stages of their lifecycle. The population of this research is firms listed in the Tehran Stock Exchange during the years 2009 to 2015. The sample consists of 128 firms selected through the screening method and removal of outlier observations. This study determines the life cycle using accounting variables in order to examine its impact on capital expenditures, net of equity, debt and liquidity changes. This research uses panel data structure with fixed effect and multivariate regression model of analysis at confidence level of 90%. Findings show that investment is more in growth stages than of maturity and decline stages. Also, results show that there is a significant positive relation between the growth stage and debt issues.

Accounting department is an important part of an organization which helps management in planning and controlling the organization by providing useful information. According to the different features of this department, its performance varies among different organizations. The purpose of this paper is to investigate dimensions and features of accounting departments and their level of maturity. To do this, this study uses CMMI model as a framework. Matrix structure of maturity model has vertical and horizontal consistency. It means that in order to make a dimension mature, it's necessary to make all other dimensions mature up to that level. Any firm can mature its accounting department up to the level which it needs and is cost effective. Data are gathered through 51 interviews with CFOs, CEOs, audit firm’ s partners, internal auditors and other related experts. Data are analyzed using thematic analysis. Research model is developed with regard to CMMI-SVC model. Finally, some experts who participated in the study are asked about research model which is developed. Findings show that role and responsibility of accounting department, reporting, processability, IT, Human resource, and organization risk management are 6 important dimensions of accounting department which evolve by 5 levels of maturing.

The most of empirical researches about the effects of changes in accounting regime on financial reporting and capital market, is about adoption of International Financial Reporting Standards (IFRS) around the world. This study is a Meta-analysis of the literature about the impact of IFRS adoption on the capital market, with the aim to sum up the results. From the published articles in the most prestigious scientific accounting journals, papers in 33 journals from 2000 to 2017are investigated (March) and meta-analysis technique developed by Hunter et al. (1982), Hunter and Schmidt (2000) and Rosenthal (1991) is followed in order to draw logical conclusions from 37 selected papers (from 17 journals) related to the adoption of IFRS. The effect of independent variable-IFRS adoption-on the main variables (10 dependent variables) is studied by calculating the effect size in five area including value relevance, level of investment, debt amount, information asymmetry, and stock liquidity, regarding to the impact of moderating variable (type of IFRS adoption). The results show the combined impact of IFRS adoption on the capital market and also they indicate that the adoption type has moderating effect on this relation.

The purpose of this study is to investigate the effect of intellectual capital and free cash flow on cost stickiness of listed firms in Tehran Stock Exchange. This study, reviewing the theory, represents a complex pattern of asymmetric behavior of costs using free cash flow and intellectual capital. The statistical sample consists of 111firms listed in Tehran Stock Exchange during the period from 2005 to 2015. This study uses intellectual capital and its’ components, as well as free cash flow as independent variables; stickiness of selling, general and administrative costs as dependent variables; and the intensity of staffs, intensity of assets, continual reduction of revenue, and growth of gross domestic production as control variables. Data is gathered using panel data method and analyzed using multivariate regression model and Eviews. The first hypothesis test results show that there is a significant anti-stickiness relation between free cash flow and selling, general and administrative costs. The second hypothesis test results show a significant anti-stickiness relation of free cash flow amounts and the intellectual capital to the stickiness of selling, general and administrative cost. Finally, the third hypothesis test findings show that the significant anti-stickiness relation is more in firms with high intellectual capital.

Audit Committee is a main component of Corporate Governance and a key factor of the financial reporting process, which increases the reliability of audited financial statements. Agency theory predicts that if the agency problem is severe, management will demand higher supervision on financial statements quality to ensure the quality of financial reporting to shareholders. Therefore, the study investigates the relation of audit committees effectiveness to audit quality based on structural equation modeling approach. The sample consists of 111 firms listed in Tehran Stock Exchange during the years 2013 to 2016. Effectiveness of audit committee is measured through observable variables of financial expert, independence, gender and size of audit committees and the effectiveness of audit quality is measured through observable variables of institutional shareholders, opinion, expertise, industry, size and auditor tenure. The results show that effectiveness of audit committees increases the external audit quality.

This study examines effects of corporate governance mechanisms and audit features on timely disclosure predicted through an audit report lag. This research is an applied and descriptive-correlative one which uses the multivariate regression method and Eviews software to analyze the data. The sample consists of 110 firms listed in Tehran Stock Exchange over the period from 2014 to 2017. The results show a significant negative relation of audit type, the number of corporate business reports, the ratio of independent directors, the size of the board, and the audit committee's activity with the audit report lag; and a significant positive relation between the unqualified audit opinion, extraordinary items, the CEO's duplicity, the ratio of inventory and debt to total assets, and property dispersion with the audit report lag.

Various studies have shown that the product market structure of firms can be effective on mechanisms of capital markets as well as investment, financing, and others. The purpose of this study is to investigate the relation between competition in the product market and stock price crash risk of firms listed in Tehran Stock Exchange. In order to accomplish the research objectives, 1 main and 6 secondary hypotheses have been developed for investigating the significance of the relationship between competition in the product market and stock price crash risk of the firms. The statistical method used to test hypotheses in this study is "panel data" and to test each hypothesis one model is estimated. Statistical sample of this study includes 73 firms listed in Tehran Stock Exchange over the period from 2004 to 2016. From the six hypotheses proposed, four hypotheses test findings show that there is a significant relationship between product market competition and stock price crash risk.

This study deals with the life cycle of firms as one of the explaining factors of return. The statistical population consists of firms listed in Tehran Stock Exchange over the period from 2003 to 2017. To evaluate the effect of the life cycle, firms are classified based on accounting information (sales growth, capital expenditures) and life (growth firms, mature firms and stagnant firms). The capital asset pricing model (CAPM) and Fama and French three factor model (3FF) are evaluated in each class and also for all firms. Vuong test results reject any difference between information content of capital assets pricing model (CAPM) and Fama and French three-factor model (3FF). Adjusted coefficient of determination in both models is the highest in mature firms and the lowest in stagnant firms. Also Cramer Z test indicates that firms' life cycle is effective on the explanatory power of models in the study.

Knowing about distortion of the accounting information is important for all stakeholders who make their decisions based on the annual reports of firms. So, this paper is aimed to compare earnings management in distress and healthy firms. The sample consists of 312 firms listed in Tehran Stock Exchange and out of the counter during the period from 2006 to 2015. Results show that both groups manipulate their earnings, however, "compare mean test" indicates that earnings management in distress firms is more than healthy firms and also distress firms prefer to use more real activity earnings management than accrual earnings management before financial distress occurrence. Results also show that the level of earnings management is not being increased significantly in distress firms as financial distress occurrence is more closing. Granger test results show that earnings management tools reciprocally affect each other.