THE IRANIAN ACCOUNTING AND AUDITING REVIEW
Year:2005 | Volume:12 | Issue:40|Papers Count:9

This study involves a comparative analysis of the information content of Traditional Liquidity Ratios (accrual based) and financial ratios derived from cash flow statement (specially, Capital ExpenditureRatios). The research results, by and large, indicates that both type of ratios contain unique properties and thus, can not substitute one another. Because the major part of factors that affect the uncertainty about Going-Concern, emphasize on liquidity problems of the enterprise, by understanding the relation between ratios stated above, can reach the better evaluation on going-concern assumption. The result of study, however, shows that there is not a significant relation between two sets and when used in conjunction with one another, they tend to depict a more clear picture of going-concern existence of an enterprise. Hence, they could be viewed as complimentary.

Barth et al. [1] and Bao and Bao [5] Shows that increasing earnings firms have higher price- earnings multiple (P/E). This study investigates the applicability of their results to Tahran's Stock Market (TSM), which has different Institutional and investor characteristics. Results show that earnings of increasing earning firms have higher persistence than those of other firms. Analaysis of variauce (ANOVA) is also performed to examine the differences in firms Characteristics. Increasing earnings firms tend to have higher net income to total assets, operating income to total assets market value of equity to total debts, and long term debts to total assets ratios.

This paper investigates the role of accrual accounting on the "quality of earnings" for the firms accepted in Tehran Stock Exchange (TSE). First 96 firms were selected between 1377-1382. Then, the method "of mesa comparisons" was used in the context of cross-sectional analysis used to cross-sectional analysis. The results indicate that accrual accounting (the difference between earnings and cash flows) does not affect the average stock returns. In addition, there is no significant difference between average returns of the firms with high and low accrual accounting. Components of accruals were also examined and similar results were found. They are changes in inventory, accounts receivable, other non-cash current assets, accounts payable, other current liabilities, discretionary and non-discretionary accruals.

The major aim of this research is to study the auditor's independence from Iranian Certified Accountants' Point of view. The result of this study indicate, That factors such as, audit commitlee, client's Size, the Size and experience of audit firms, increase anditor's independence. Other factor, namely Competition between anditing firms decreases auditor's independence.

This study examines the possible impact of culture on income smoothing. Explanatory variables capturing Hofstede cultural values are used from prior literature to proxy for Individualism, Masculinity, Power Distance and Uncertainty Avoidance. It is hypothesized and shown that relation between Hofstede cultural values and income smoothing exists among companies registered in Tehran Stock Exchange. Explanatory variables for income smoothing are statistically significant only after including the cultural value measures. This research is the first in Iran that connects cultural values to income smoothing and in this manner adds to the income smoothing literature.

One of the assumptions of efficient market is that investors react to new information. The evidence shows that investors overreact to new information .They tend to be either over-optimistic or over-pessimistic. Therefore equity prices are not equitably determined by the "true" forces of market supply / demand and are not in equilibrium most of the time .Although stock prices would go abnormally high (low) due to Investors' Overreaction in the initial period, they have a tendency to adjust themselves back to the equilibrium level in the subsequent period. This research investigates The Investors' Overreaction in the Tehran Stock Exchange. The results indicate that stocks in the best (worst) performing experience, a reversal of fortune in the following years.