Journal of Empirical Research in Accounting
Year:2019 | Volume:9 | Issue:33|Papers Count:16

This study inves tigates the effects of tax avoidance on tax risk using a conceptual and statistical modeling of tax risk measuring, based on uncertainty indicator. The sample consists of 114 firms in the period from 2009 to 2016. Tax avoidance is measured by the effective tax rate (ETR). Also tax risk is measured using the EGARCH model and defined as the instability of tax status over time. The research findings show that there is a significant negative relation between effective tax rate and instability of the tax status, which means that firms with lower effective tax rate have instability of tax status over time. On the other hand, findings indicate an increase in tax difference in event of effective tax rate decreases. According to findings, one of the consequences of tax avoidance is increases of tax risk. The findings provide new evidence about the consequences of corporate tax avoidance. These findings can be used to assess the tax risk of firms based on their effective tax rate. Also the findings suggest investors and managements to consider the consequences of corporate tax decreases.

Despite all strong literature reviews about earnings management, there is no correct explanation of the accruals utilization effect on a firm's financial decisions. Firms with financial constraints can adjust debt contract requirements and decrease the cost of their debts using discretionary accruals with positive signal to the market. This study is aimed to examine the relation of effective opportunistic earnings management to financial constraints. The sample consists of 94 firms listed in Tehran stock exchange over the period from 2001 to 2016. To measure the earnings management variable, the rolling linear regression and time series data are used. The multivariate regression using panel data is used to examine the first hypothesis and the multivariate regression using cross-sectional data is used to examine the second and third hypotheses. The results show that there is a positive significant relation between financial constraints and earnings management. Also examining two kinds of earnings management, as opportunistic and effective, indicates that there is no significant relation between financial constraints and effective earnings management, but there is a positive significant relation between financial constraints and opportunistic earnings management. Therefore, in Iranian capital market, managers use opportunistic earnings management even in financial constraints occasions in the line of their personal benefit.

Managers’ personality traits can affect investment decisions of a firm. One of the most important personality traits of managers, which affects risk taking is overconfidence. Overconfidence can be defined as an idle belief in oneself cognitive abilities, judgments and intuitive reasoning. Overconfident managers overestimate their information accuracy and consiquently, their enterprise future earnings and cash flows. Also they may invest in projects with no cash flow required to achieve shareholders' expected return. This study is aimed to investigate effects of Financial Reporting Quality on the relation between Managerial Overconfidence and Investment Efficiency in Firms Listed in Tehran Stock Exchange. The sample consists of 112 firms listed in Tehran Stock Exchange during the years from 2007 to 2015. This study uses a manager's bias as a criterion in order to measure managerial overconfidence. Financial reporting quality in this study for each firmyear is measured using accounting data of a five year period and rolling regression. The results of testing first hypothesis suggest that managerial overconfidence leads to a reduction of investment efficiency. The results of testing second hypothesis indicates that Financial Reporting Quality weakens the relation between Managerial Overconfidence and Investment Efficiency. According to further investigations, firm size, sales growth and operating cash flow ratio have a significant relation with investment efficiency.

This research is aimed to investigate the moderating effect of auditor expertise on the relation between related party transactions and investment efficiency. In other words, the study seeks to answer the question “ whether auditor expertise will decrease the effect of related party transactions on investment efficiency. It is expected that the results help to understand factors moderating the relation between related party transactions and investment efficiency. Hence, two hypotheses are developed and data from 65 firms listed in Tehran Stock Exchange for the period from 2009 to 2015 are analyzed. The results show that there is a significant negative relation between related party transactions and investment efficiency. In other word, managers incurring considerable agency costs, opportunistically use related party transactions which lead to inefficient investment. Also, the findings indicate that auditor industry expertise moderates the relation between related party transactions and investment efficiency. In fact, the negative relation between related party transactions and investment efficiency is weaker in firms audited by auditors with industry expertise as compared to other firms.

Behavioral finance perspectives state that investor sentiment affects stock price. Managers being aware of behavioral finance effects on stock price are expected to be more careful in their decision for earnings management. The sample consists of 475 observation (firmyear) in the period from 2010 to 2015 and the aim is to examine the relation between investor sentiment and accounting earnings management. To measure the investor sentiment and accounting earnings management, Shamsoddini (2015) and kaznic (1991) models are used respectively. The results show a significant positive relation of the momentum effect and value premium (price/earnings) variables to accounting earnings management. As a result, investors' short-term attitudes affect the extent of accruals manipulation. However, there is no significant relation between the investor sentiment and real earnings management.

Preventing from and fighting against speculation, fraud and financial mismanagement are as bases of a resistance economy system. Internal audit is a mechanism that can play an important role in paving the way for preventing fraud and financial mismanagement, through ensuring the internal controls effectiveness. Such a mechanism itself must work effectively to handle this role. According to internal auditing standards, infrastructure performance assessment helps internal auditing management to improve the performance quality. This study adopts a classic basic theory approach to extract the model of internal audit executives' view from performance assessment of internal audit in Islamic Republic of Iran. The model shows that legitimacy is the main concern of internal audit managers, which is extracted from interview data using classic basic theory method. It is the first time that this concept presented in the field of assessing internal audit performance studies.

This research is aimed to investigate the effect of accounting restatements on cash holding policy. Firms often hold significant amounts of cash in their balance sheets due to capital market defects such as information asymmetry, agency problems, transaction costs, and external financing costs. On the other hand, accounting restatements can affect the level of cash holdings and its market value. This research is a causal, post-event and applied one. The sample consists of 155 firms listed in the Tehran Stock Exchange during the period from 2009 to 2016. Findings based on the multivariate linear regression analysis show that, according to the strengthened control theory, accounting restatements lead to a decrease in cash holdings. Also, in line with the agency theory, restatements of financial statements will lead to a decrease in the market value of cash holdings from investors' perspective. In other words, investors interpret the accounting restatements as a negative signal.

The aim of this research is to examine the role of accruals in forecasting cash flows, earnings, and valuation based on Barth et al. (2016). In fact it investigates information content of accruals in these three material cases. This model is the developed one of Dechow and Dichev (2002) and shows that separation of accruals on the basis of their role in cash-flows conforming to the economic factors creating the cash flows helps to explain forecasting models and valuation. Data from 179 firms listed in Tehran stock exchange over the years from 2007 to 2016 is analyzed. Separation of accruals on the basis of their role in cash-flows conforming to the economic factors creating the cash flows helps to explain forecasting models of earnings, cash flows and valuation. Analysis of models indicates that each type of accrual has different information content in forecasting cash flows, earnings and valuation.

The aim of this study is to investigate the impact of board of directors’ financial literacy on real earnings management. The sample consists of 150 firms listed in Tehran Stock Exchange during a period from 2010 to 2016. Data is analyzed using panel data method and Eviews. This research uses real earnings management criteria including abnormal operational cash flows, abnormal discretionary costs and abnormal production costs. The financial literacy of the board members are measured using the educational degree. The results show that there is a positive and significant relation between financial literacy of the board members and the abnormal production costs as well as the abnormal discretionary costs. However, there is a negative and significant relation between the abnormal cash flows and financial literacy of the board members.

Understanding cost behavior is one of the important issues of cost accounting and management accounting. In traditional cost behavior models, variable costs are increased or decreased in proportion to changes in activity volume, and change directions in activity volume do not affect cost changes magnitude. It means that changes in activity level to a certain extent lead to costs increase or decrease to a certain extent. This research uses data from 150 firms over the years from 2011 to 2016 and structural analysis method in order to analyze costs stickiness in Iranian Capital market. This research is an applied, descriptive correlational, desk-Field and post-event study. The results show that there is a significant relation between cost stickiness and corporate governance characteristics as well as future conservatism of a firm, however, there is no significant relation between cost stickiness and earnings management as well as earnings quality characteristics.

This study examines the relation between managerial ability and audit fee as well as the effects of financial distress on the relation. To test the hypotheses, this study uses multivariate regression method and the statistical "panel data" technique. To measure the managerial ability and financial distress, this study uses DEA methods according to Demerjian et al. (2012) and Altamn model modified by Roodposhti et al (2010), respectively. The sample consists of 82 firms listed in Tehran Stock Exchange over the period from 210 to 2016. Findings show that there is a significant negative relation between the managerial ability and audit fees and also, this relation is not moderated with financial distress.

Considering the amended rules and financial crises in recent years, shareholders and investors need higher scale and quality of reliable information to make better decisions. One of the most important information sources in capital markets is managers and their decisions, that means managers' performance and decision making can help investors to make better decisions. This research examines the effect of Managerial entrenchment on earnings management of firms listed in Tehran Stock Exchange. The sample consists of 98 firms listed in Tehran Stock Exchange during the years 2007 to 2016 and the hypotheses are tested using a multivariate regression model. Findings show that there is a significant negative relation between managerial entrenchment and accruals earnings management as well as real earnings management. It was also found that, managerial entrenchment has reverse effects on the relation between opportunistic incentives of earnings management and the firm value. In other words, managerial entrenchment leads managers to pursue long-term goals through investment in profitable projects and plans resulting in value growth, rather than short-term goals through earnings manipulation.

Fraud is always a major concern for firm managers and stakeholders. Timely diagnosis of fraud risk factors or internal control deficiencies is effective in preventing and detecting frauds. Determining the adequacy of internal controls is a judgment, and reporting the defects based on their risk is a decision. This research is an applied and exploratory research that collects and models data from 342questionnaires on the factors affecting the judgments and decisionmaking process in misappropriation of assets, by structural equation modeling (SEM), and uses Smart PLS software to test of model. The results show that personality factors such as consistency, conscience, extroversion and openness to experience have a significant relation with goal oriented learning, but, there is no significant relation between openness to experience and goal oriented performance. Goal orientation has a significant effect on knowledge, but there is no significant relation between goals oriented performance and experience. Also, knowledge and experience have a significant effect on identification of risk factors, which leads to detection of the fraud possibility. Finally, the results of the tested model indicate that the people's decision to report susceptible fraud has a significant relation with the detection of the fraud possibility, morality and motivation.

Government and politicians intervention in boards of directors' decision making may affect firms' business trajectory. A stock market should display informational efficiency and, therefore, should appropriately reflect the value of political connections, if any. This study is aimed to investigate the effect of political connections on corporate social responsibility, focusing on product market competition. The sample consists of 60 firms for the period from 2011 to 2016. . In order to measure social responsibility, Kinder, Lydenberg, & Domini Research Institution ranking is used. Also, research hypotheses are tested using a panel data model. The results show that any increases in political connection increases social commitment and accountability of managers. Firms are also divided into two groups according to the product market competition, and the results show that political connection has a positive impact on social responsibility in firms with high product market competition, however this is not so for firms with low market competition. Increasing competition is effective in increase of social responsibility.

Earning managements means general intervention of management in the process of determining earnings, which is often in line with desired objectives of the management. In the accounting literature, the most common methods for earnings management are accrual-based earnings management and real activities earnings management. This study examines the effectiveness of a firm's geographic dispersion on choosing between the two kinds of earning management, as the real activities earnings management and the accrual-based earnings management, to be followed. This research is an empirical fundamental in terms of objective and a correlation in terms of nature. The statistical population consists of firms listed in Tehran Stock Exchange in the period from 1386 to 1394. The sample consists of 105 firms from different industries and the sampling method is systematic elimination, libraries and documentation. This study has two hypotheses which are tested using multivariate regression and T-test models. The results show that geographically dispersed firms have a lower level of accrual-based earnings management as well as real activities earnings management, as compared to the other firms.