THE IRANIAN ACCOUNTING AND AUDITING REVIEW
Year:2018 | Volume:24 | Issue:4 |Papers Count:8

Accruals are the non-cash component of earnings. Cash-based operating profitability is a measure that excludes accruals from the operating profitability. We used this measure to predict stock returns. With a sample of 164 stocks from the Tehran Stock Exchange (TSE) over the period of 2006 to 2015. We observed the relations between accruals, operatingprofitability and cash-based operating profitability in the cross section of stock returns and found that cash-based operating profitability is a better measure compared to accruals and operating profitability in predicting stock returns. We also performed portfolio sorts and priced accrual-size portfolios using Fama and French three-factor model augmented with accruals, operating profitability and cash-based operating profitability. It turned out that the three factor model which was augmented with cash-based operating profitability factor outperformed other augmented models for pricing portfolios sorted by accruals-size according to well-known performance measurement tests such as GRS.

Owners of companies for monitoring agent and prevent their opportunistic behaviors and reducing information asymmetries as well as reduce the cost of agent, refer to independent auditors. This role of auditing in examining manipulation of financial statements and consequently, earning management, has a particular importance. Thus the aim of this paper is to examine the relationship between types of independent auditor's opinion, and quality of profit indicators. Statistical sample of this study consists of 70 companies listed in the Tehran Stock Exchange during 2010-2016. The data has been tested with using the panel data approach and the Arellano-Bover/ Blundel-Bond (1998) method. The data has been analyzed by three models with considering earnings quality as related variable (including earnings sustainability, accrual items quality, and information reliance). The results showed that the type of independent auditor's report has a meaningful relationship with profit quality indices in all three models. Also, the type of independent auditor's report has a negative relation with sustainability index and quality of accrual items, and ultimately this relationship is meaningful and positive with information reliance index.

The aim of this study isto examine the effect of the company's strategy (Including competitive strategy, investment strategy, financing strategy, company strategy based on past information, and company strategy based on future information) and managerial ability on asymmetric cost behavior. For this purpose seven hypotheses are developed and data about 106 companies listed in the Tehran Stock Exchange for the period between the years 2006 to 2015 are analyzed. Regression models using panel data approach are reviewed and tested. The results show that the investment strategy, company strategy based on future information and management ability increase the asymmetry of cost behavior. In addition, the results show that the company's competitive index and financing strategy variables reduce the asymmetry of cost behavior. On the other hand, the results indicate that the company strategy based on past informationand GDP growth have no significant effect on the asymmetry of cost behavior in companies listed in the Tehran Stock Exchange.

The purpose of this paper is to assess the relation between accounting comparability and earning management method selection. Comparability is a qualitative characteristic of accounting information. It makes information users' able to identify and understand similarities and differences between two set of information and use them in their decision making. Accrual earning management is a potential factor which can seriously damage comparability. We defined comparability as a characteristic of accounting system outputs and the assessed companies' return and earning which were in an industry. We examined a sample of 72 companies of the Tehran stock exchange in 6 industries during 2005 to 2015. Findings show that accounting comparability has no relation with real and accrual earning management.

Cost stickiness affects the behavior of costs in different ways. In this paper, the effect of economic growth and economic sanctions on cost stickiness was investigated. The data from 117 companies of the Tehran Stock Exchange from 1996 to 2015 was selected. Multiple regression was used for hypothesis testing and to compare the coefficients during the minor and severe sanctions, the Petronaster test has been used. To examine the cost stickiness during these periods the 20-year period was divided into the boom and recession, and usual and severe sanctions periods. Cost stickiness was investigated in terms of public and administrative costs, cost of goods sold and operational costs. Results show that cost responds asymmetrically to identical sales. Economic boom affects positively costs stickiness in other words, cost stickiness raises during the economic boom. Recession has a negative effect on cost stickiness. In other words, there is no cost stickiness during recession. Although severe economic sanctions have a negative effect on cost Stickiness, the difference of cost stickiness during the usual and sever sanctions is significant in operational costs. Despite the negative impact of sanctions on cost stickiness, the difference of public and administrative costs and cost of goods sold are not statistically significant.

Market supervisors’ movement towards international accounting standards can highlight the role of fair values ​ ​ in the financial reporting of Iranian companies. Past experience has shown that although fair values ​ ​ have become more sophisticated by complying with international accounting standards, standard adoption has been delayed due to the lack of necessary infrastructure. In this regard, 17 experts from different field's securities and stock market organization, audit organization, official accountants community, experts in the field of justice, corporate executives and tax professionals were interviewed. Conditions, strategies, context, intervening conditions and implications about adopting a fair value system are presented through the grounded theory research method and with an emphasis on measurement. This paper helps to turn attentions to valuation area in the country, and to develop valuation standards for independent assessor which promotes fair value measurement.

In this paper, fair value and impairment of an Iranian bank's loan portfolio is estimated using the approach of International Financial Reporting Standards and the result is compared with values using the approach of Central Bank of Iran which is based on reporting historical cost and incurred loss. Present value of future cashflows and expected credit loss are used for calculating fair value. Expected credit loss is estimated through predicting probability of default and loss given default based on models developed using neural network method and data from loans paid during years 2007 to 2016. The results of fair value and expected credit loss from 208 loan contracts, which comprise 82 percent of bank's total loan portfolio in 2017, show that the ratio of expected credit loss to incurred loss is 2/3 which is considerable, but the ratio of the fair value to historical cost is 97 percent which is not considerable. Furthermore, findings show that the approach of IFRS has an impact on the capital adequacy ratio of the bank and reduces it.