THE IRANIAN ACCOUNTING AND AUDITING REVIEW
Year:2009 | Volume:15 | Issue:54|Papers Count:10

In this study we examine the relation between auditors, auditor's reports and earnings management (EM). EM is measured by discretionary accrual (DA). In the case of auditors, type of auditor institutions, type of auditor's opinion in audit reports and the number of qualification paragraphs in audit reports are measured on DA. To examine DA, the modified Jones model is used. Type of audit institutions is divided to Audit Organization and other, and type of auditor's opinion is divided to qualified opinion and clean opinion. In this research we use the multivariate regression. To test the research hypothesis, we employ pooled and cross-sectional data of 71 companies listed in TSE in 2002- 2005. Results of the study showed that only type of audit institutions is related to DA.

Based on efficient market hypothesis the stock prices follow random walk process. In such market the stock return cannot be predicted using past price variation. However, efficient market hypothesis is under question because the researchers have provided evidences that reveal some anomalies in stock markets. Mean reversion is one of these anomalies. Therefore this study aimed at investigating mean reversion in Tehran Security Exchange. For the purpose of the study, variance ratio test was used to examine mean reversion in three indexes of TEPIX, TEDPIX, and 50 most traded at different time periods. The obtained results confirmed mean reversion in TEPIX, TEDPIX during the most time period. This is while, the 50 most traded indexes have followed random walk from 1384to 1387 and during most time intervals.

The result of many researches show that investors prefer smoothed incomes. On this regard managers try to smooth income and its growing rate. On the base one classification of management incentives for income smoothing, managers smooth incomes either for purpose of garbling of information and their benefits or in order to transforming and reporting the insider information about future earnings. The purpose of this research is to investigate managers' incentives from income smoothing in listed companies in Tehran Stock Exchange. In this research, income smoothing is measured by negative correlation changes in discretionary accruals and changes in pre-discretionary income using data during 1376- 80. Then, by using the Collins et al model expanded by Tucker & Zarowin, the relationship between future earnings per share and current return entering income smoothing index in the model of 1380-82 is investigated. Results show that current stock price of companies' which smooth in larger degree, contain lower information about future earnings. Therefore, income smoothing is mostly done in order to garbling not to convey insider management information.

Studies investing the market overreaction argue that investors overreact to past financial performance investors drive stocks with high historical financial measures above their fundamental values. On the other hand price of stocks with poor past financial performance are pushed below their fundamental value. Subsequently, when investors realize that their previous expectation have not materialized, stock price of these firms revert to their fundamental values. The current study investigates overreaction of stockholders in the Tehran stock exchange (TSE). We also examine the impact of book to market ratio and firm size on the overreaction. Time frame of present study is eight years that is ranged from 1998 to 2005. Testing method in this study is portfolio test. For analyse of results are used statistic t test. Results of this research show that investors in the Tehran stock exchange overreact to sales, earning and return of stock but they don't overact to cash flow.

The main goal of this paper is determining the link between information asymmetry among equity investors and conservatism in financial reporting. Because we argue that information asymmetry between equity investors generates accounting conservatism in financial statements. Conservatism reduces the manager's incentives and ability to manipulate accounting numbers and so reduces agency costs that information asymmetry generates. In this paper the Bid-Ask spread and Basu coefficient is used respectively as measures of information asymmetry and conservatism. Our statistical population is the firms listed in Tehran Stock Exchange that examined for the time period 1381 to 1385 by 81 firms as the sample. The results of empirical tests indicate that information asymmetry among equity investors is significantly positively related to conservatism. Further, the results indicate that changes in information asymmetry between equity investors lead changes in conservatism. This result shows that as the consequence of the increase in the information asymmetry between investors, the demand for conservatism increases. These results confirm the usefulness of conservatism as a qualitative characteristic of financial statements.

Investment institutions with substantial shareholdings in a firm have the resources and incentives to monitor and influence management decisions. Whether the institutions actually monitor and exert pressure on managers is an empirical question. This study is designed to provide insights into the monitoring role of institutional investors by examining whether institutional ownership affects the in formativeness of reported earnings. In this study, different hypothesis (active Monitoring Hypothesis & private benefits Hypothesis) in relation to institutional investors, are tested. Two multifold linear regressions analysis is used to test the relation between corporate Earnings in formativeness and institutional ownership. The results demonstrate significant evidence of a positive association between percent of institutional stock ownership and Earnings in formativeness and approve Effective Monitoring Hypothesis. In addition, the number of institutional ownership dose not improves Earnings in formativeness and decreases it.

The aim of this study was to compare the explanatory power between two models of residual income valuation and abnormal earnings growth in determining the value of admitted companies in Tehran Security Exchange. According to the model of residual income valuation, the value of the company follows book value of equity and earnings by clean surplus accounting method and the value of the company follows abnormal earnings over time, based on abnormal income growth model. Abnormal earnings are exceed earnings of a company accounted according to imposed capital costs over time. Our study sample included 177 companies during 2002 to 2007. As the findings showed, none of the hypotheses verified significant difference between explanatory powers in two models. The findings also indicated that there was a significant relationship between the company value and accounting variables but there wasn't a significant difference between explanatory power in determining the company values. It was also revealed that explanatory power of residual income valuation model was relatively higher than abnormal earnings growth model in all cases.However, it should be noted that there were two independent variables in residual income valuation model but one independent variable in abnormal earnings growth model. 

The findings of various Researches have challenged the validity of EMH in the last two decades. One of these challenges is misreaction of investors to new information that leads securities prices don't reflex the real value of securities. This Research has investigated the under reaction hypothesis of Jegadeesh & Titman [19] In TSE, through short term Returns of stocks from 1998to 2005. In this article 6 hypothesis were analyzed. Statistical methods of T-test and Pearson's correlation were used to analyze the hypothesis. Results of this Research, Contrary to Many Foreign Researches do not Represent the Under reaction of investors in 6 month periods; therefore can't earning excess Returns through the use of Relative Strength (Momentum) strategy in TSE.

This paper tries to identify factors that can reduce company marginal tax rate and debt tax advantage. In this order, at first Iran's tax codes were investigated and three main groups of factors that can reduce company marginal tax rate, were identified. The groups consist of revenues structure, expenses structure, and other exemptions used by the firms. Then the relationship among debt tax advantage, which belongs to expenses structure, with revenues structure and other exemptions used by the firms, were examined. The examination was made by using a multiple regression model and sampling data for 160 firm-years from tax returns of some firms which listed in Tehran stock exchange during 1998-2005. The results indicate that, as were predicted, use of debt is decreased as corporate tax rate is reduced. The results also show that, in contrast to the prediction, debt is positively related to export revenue, stock exchange revenue, and revenue of investing in other firms which are proxies for non debt tax shields.