THE IRANIAN ACCOUNTING AND AUDITING REVIEW
Year:2009 | Volume:16 | Issue:55|Papers Count:12

The "opportunistic behavior" hypothesis posits that listed companies have lower earnings due to management intervention in the earnings process as a result of capital market pressure as well as their own interest. We identify three attributes associated with the notion of earnings quality including persistence and estimation error of accruals and prevalence of earnings management. We compare earning quality of 40 companies before and after being listed in TSE during 1381-1387(2003-2009). This paper illustrates the effects of public ownership on earning quality. We test the three hypotheses using regression, paired sample T test and Wilcoxon techniques . The results show that persistence of accruals are decreased after listing the companies, but estimation error of accruals and prevalence of earnings management have no significant difference. The results are consistent with the "opportunistic behavior" hypothesis.

Bankruptcy prediction is one of the major business classification topics. Owners, managers, investors, creditors and business partners, as well as governmental institutions are interested in assessing the financial position of firms. Nowadays several models have been used to predict bankruptcy. The goal of this study is the presentation of theoretical basis of bankruptcy and comparing the results of prediction of Altman and Fulmer models. So the data collected were examined during the years 2000-2004. To analyze the data the nonparametric statistical models were used. The results show that in the prediction of bankruptcy, there is a significant difference between two models. Altman model has done more conservatively than Fulmer model as well.

Behavioral researchers have long been concerned with the effects of experience on decision making, especially in such highly technical field such as auditing. This paper investigates effects of experience on task complexity by relying on Simon’s model of the decision process, As this paper provides evidence that the experience effect is significant when task complexity is explicitly considered. It reports the results of a series of experiments examining structured, semi-structured, and unstructured task in that subjects are pooled into two groups: "experienced" (Certificated Public Accountant in audit organization) and "inexperienced" (lower staff level and less experienced auditors in the audit organization). Responses to a separate study of 46 partners and managers were used to independently establish the appropriate staff level for structured, semi-structured, and unstructured tasks and complexity. These results suggest that significant decision differences exists between the experimental groups on each task and less experienced junior auditors are questionable surrogates for CPAs in unstructured tasks especially.

Relationship between ownership structure and company performance are Sticky Topics in financial management. Performance is an economic function of many factors that one of the factors is ownership structure of companies that can affect their performance much. The purpose of this study is to survey the combination effect of ownership structure on the return of the accepted companies in Tehran Stock Exchange. Composition of shareholders in this study is an independent variables and dependent variable is the stock return. Spatial scope of this research includes companies accepted in Tehran Stock Exchange and the time scope of this research is from the beginning of 1381 until the end of 1385.Society accepted for the statistical research is companies in Tehran Stock Exchange during the years of 1381 till 1385. The results of this research do not fully reject the nonlinear effects of the combination of shareholders return. The results of this research shows that companies without large stock holders (shareholders and the combination is more scattered) are more appropriate as investment options. Companies which more Percent of their shares are corporate shares are more appropriate as the investment options. Effect of the personal ownership and the rate of true ownership of a company's Board of directors were not approved.

Changeable economic conditions and intense fluctuations in business environment are provided stakeholders to make decision under material uncertainty. In this case, using some models to predict financial performance (financial health or distress) by identifying effective variables or indexes is very important. This paper determines whether a model utilizes a number of economic and financial variables (such as cash flow ratios and the other financial ratios) which can be useful to predict the financial distress. In this study four prediction models like Wallace, Springate, Shirata, & Thai da are developed with cash flow ratios & economic variables with lag1 and lag2 which are tested by logistic regression. Then they are compared to determine the better prediction ability. Based on the findings, it is claimed that Wallace, Springate developed models with cash flow ratios &economic variables they have some efficient variables to predict financial distress or failure.

This study investigate the effect of institutional stock ownership on a firm's earnings management activity by testing the empirical association between institutional Investor shareholdings and flexibility available for managers to make use of abnormal Accrual adjustments to manage earnings. This study is motivated by the fact that most previous earnings management research generally ignores the influence of corporate governance factors that might constrain managers' ability to manage earnings. Institutional investors improve the quality of corporate governance in financial reporting. The statistical population of this research consists of listed companies on Tehran Stock Exchange (TSE). It is Used 2 different types of statistical test (Correlation and multi cross-sectional regression tests) for investigating the relationship between earnings management and institutional stock ownership. The results show a significant difference between stock institutional ownership level and its concentration with earnings management.

Prediction is an important part of the decision-making process, because decision making reflects what will happen in the future. In economic decision making, financial prediction is a important activity. Cash flow prediction is required in various economic decisions, because the cash flows are the basis for dividends, interest payments and repayment of debt. With respect to theoretical literature and conducted researches, three regression models are constructed namely earnings, cash flows, accrual components and cash flows models for predicting future cash flows. The empirical results show that past earnings, cash flows, cash flow and accrual components of earnings can be used to predict future cash flows of Tehran listed companies. But there are not different predictive powers between three prediction models. Furthermore, additional year lags of accounting data can improve the predictive power of the model.

This study examines how the quality of corporate disclosure which includes timeliness and reliability, impacts earnings management by Tehran Stock Exchange (TSE) listed companies. We use a sample of 51 listed companies over a five-year period (2003-2008). The focal point of our study is whether improving disclosure quality decreases information asymmetry resulting in less earnings management. In this study, timeliness and reliability of the provided information are used as a proxy for disclosure quality. Discretionary accruals calculated using cross-sectional modified Jones model is used as a proxy for earnings management. We find a negative association between corporate disclosure and earnings management and also between timeliness of corporate disclosure and earnings management, suggesting that improving the timeliness of disclosure decreases the likelihood of earnings management by the companies. However, we do not find any significant association between reliability of disclosure and earnings management.