THE IMPACT OF SOCIAL CONSTRUCTS SUCH AS LEGALISM, RELIANCE DEMANDING, LEVEL OF EDUCATION OF THE FINANCIAL MANAGERS, INDIVIDUALISM, GENDER, THE ACADEMIC MAJOR OF THE FINANCIAL MANAGERS, AND THE RECORDS OF THEIR SERVICE ON FINANCIAL DISCLOSURE

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MAHDAVI GH.H.; GHASEMI MEYSAM

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Journal: Journal of Accounting Advances Year:2009 | Volume:1 | Issue:1 (57/3) Page(s): 191-215

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Title

THE IMPACT OF SOCIAL CONSTRUCTS SUCH AS LEGALISM, RELIANCE DEMANDING, LEVEL OF EDUCATION OF THE FINANCIAL MANAGERS, INDIVIDUALISM, GENDER, THE ACADEMIC MAJOR OF THE FINANCIAL MANAGERS, AND THE RECORDS OF THEIR SERVICE ON FINANCIAL DISCLOSURE

Author(s)

MAHDAVI GH.H. | GHASEMI MEYSAM | Issue Writer Certificate

Keywords

DISCLOSURE OF FINANCIAL INFORMATIONQ3

SOCIAL CONSTRUCTSQ3

LEGALISMQ3

RELIANCE DEMANDINGQ3

INDIVIDUALISMQ4

Abstract

Introduction: The main objective of financial reporting is to provide the necessary information for decision making. For so doing, there is a need for the proper disclosure of financial and other related, reliable and comparable information about the economic activities of a company. A great deal of research has been conducted on the subject of accounting changes and their effect on financial disclosure in different countries. In 1970s and 1980s, the approach of research on accounting changes shifted to descriptive with the aim of investigating the effects of state benefits, markets and other public conventions on the degree of financial disclosures in financial reports. One of the aspects which came to be at the center of attention in such kinds of research was the investigation of political and economic outcomes as results of selecting different accounting policies. Over the past decade, some research has been done (e. g. , Jaggi and Low, 2000; Chow et al., 2001; Hope 2003; and Doupink and Riccio 2006) to investigate the impact of environmental factors on accounting principles and policies in different countries. In these research, concepts like distrust, INDIVIDUALISM, patriarchy, and power distance are considered important SOCIAL CONSTRUCTS and thus effective on the current accounting systems in different countries. The reason is that accounting, as a social-technical activity, is related to human and natural resources and the interaction of these two. According to Parra (1989) though the technical aspect of accounting, with respect to the human aspect, has less relation with environmental factors like SOCIAL CONSTRUCTS, yet because of the existing interaction between the two aspects, the technical aspect of accounting cannot to be investigated without regard to the effective environmental factors (42). According to Ahmadi (1382), SOCIAL CONSTRUCTS consist of people’s opinion, gender, academic major of the financial managers, control power, information power, reward power, LEGALISM, illegality, INDIVIDUALISM, advertisement, collectivism, RELIANCE DEMANDING, conservatism, secrecy, distrust, and stubbornness. One of the most important reasons for doing research to investigate the impact of environmental factors like social and cultural constructs on accounting and disclosure is – if evidence proving the relationship between the two is found-the necessity to reconsider and modify the target accounting policies for disclosure in accordance with the SOCIAL CONSTRUCTS influencing it. Therefore, the question of this study is whether the social construct such as LEGALISM, RELIANCE DEMANDING, education, INDIVIDUALISM, gender, academic major of the financial managers, and career experience are effective on the financial disclosure of the companies accepted in Tehran Stock Exchange.Research hypotheses: According to the theoretical model, the question of this study was designed and tested in the form of seven hypotheses:1. There is a meaningful relationship between LEGALISM and financial disclosure. 2. There is a meaningful relationship between RELIANCE DEMANDING and financial disclosure. 3. Different educational levels are different in disclosure. 4. There is a meaningful relationship between INDIVIDUALISM and financial disclosure. 5. There is meaningful difference between male and female managers in their disclosure. 6. There is meaningful difference between disclosure and the academic major of the financial managers. 7. There is a meaningful relationship between the career experience of the managers and their disclosure.Research Methodology: This research is conducted through survey. In the theoretical phase, the necessary information for the survey was gathered through reference to books, magazines and internet databases. In the field phase, however, a questionnaire of 5 general and 55 specific questions was used. The specific questions of the questionnaire were those of the closed and conditioned and have been adapted in accordance with the Likert Spectrum. In order to gain logical certainty of the validity of the questionnaire, in addition to the comments by specialists of the field, a pretest was used. The questionnaire was distributed among 20 people of the statistical society, who had been randomly selected, and the questionnaire was modified according to the suggestions made by this group. In order to evaluate the reliability of the questionnaire, the α-Cronbach test was used. The calculated α-Cronbach was 0.78, and therefore none of the questions of the questionnaire was left out. The statistical population of the study was the financial managers of different companies constituting the Tehran Stock Exchange. In 1385, the number of the companies constituting the Tehran Stock Exchange was 323. In order to determine the volume of the sample, the Kookran formula was applied, and the number of the sample companies was calculated to 81. Furthermore, to choose the sample from the total population, the classified sampling method was used. In order to analyze the data obtained by the questionnaire, descriptive and inductive statistical methods were used. In order for the qualitative analysis of the general information obtained from the questions of the first part of the questionnaire, there were use of classification and organization of the information, relative frequency distribution, absolute frequency distribution and numerical average. For testing the hypotheses of the study, statistical tests like, Pearson’s correlation coefficient and variance analysis were used. SPSS was used for the data analysis and conducting the above statistical tests. Results: The results from the calculation of Pearson’s correlation coefficient for the 1st, 2nd and 4th hypothesis revealed a high correlation between the variables of the mentioned hypotheses and financial disclosure. Therefore, LEGALISM, RELIANCE DEMANDING and INDIVIDUALISM have a meaningful statistical relationship with financial disclosure. The results from the calculation of the coefficients of the regression model show that LEGALISM (with the coefficient of 1.53), RELIANCE DEMANDING (with the coefficient of 1.448), and INDIVIDUALISM (with the coefficient of 2.148), the models of which are as follows, exercise a meaningful and direct impact on financial disclosure: financial disclosure=51.533+1.53 (Legalism) financial disclosure=1.448+ (DR) financial disclosure=63.855+2.148 (Individualism) The results from variance analysis of the hypotheses 1st, 2nd, 3rd, 4th and 7th show that the variables of LEGALISM, RELIANCE DEMANDING and INDIVIDUALISM have impacts on financial disclosure, while variables like degree of education (the third hypothesis) and managers’ career experience (the seventh hypothesis) exert no impact on financial disclosure. To test the 5th and the 6th hypotheses, a free-sample T-test approach was picked up. Results from testing the 5th hypothesis show that there is no actual difference between males and females with regard to their financial disclosure. Results also show that there is no significant difference between people from different educational majors in their financial disclosure. Therefore, gender and the academic major of the financial managers exert no impact on financial disclosure either. On the basis of the accepted hypotheses of the study, below, an experimental model is suggested in which INDIVIDUALISM, LEGALISM and RELIANCE DEMANDING are independent variables and disclosure is the dependant variable: disclosure=b0+b1 (individualism)+ b2 (DR)+b3 (legalism) Therefore, using the obtained information from the results of the study, the final adjusted model of financial disclosure is as follows:disclosure=1.548 INDIVIDUALISM+0.716 DR+0.689 LEGALISM+eThe results also show that the variable of INDIVIDUALISM has the biggest impact on financial disclosure. After that, LEGALISM and RELIANCE DEMANDING have respectively the most impacts on financial disclosure. In addition, results from the multi-variance analysis show that the multi-regression model is a good model to describe the type and quality of the relationship between LEGALISM, RELIANCE DEMANDING and INDIVIDUALISM, and financial disclosure. Conclusion: Results from testing the hypotheses of the study show that SOCIAL CONSTRUCTS of LEGALISM, RELIANCE DEMANDING and INDIVIDUALISM have direct and significant impact on the financial disclosure of the companies of the study. However the other SOCIAL CONSTRUCTS-level of education, gender, the academic major of the financial managers and experience-have no impact on the financial disclosure of the aforementioned companies. The results also show that INDIVIDUALISM has the highest impact on financial disclosure. Considering the significance of financial disclosure on people’s decision making and with reference to the results from the present study, the following suggestions are made:1. Considering the impact of INDIVIDUALISM on financial disclosure, before employing managers, psychological tests should be conducted to evaluate the characteristics of managers, and managers who would do more disclosures on companies should be employed. This procedure is presently being followed by companies like Hamkaaraan System. 2. With regard to the impact of LEGALISM on financial disclosure, Tehran Stock Exchange should implant general regulations for the financial disclosure of its accepted companies. 3. An organization should be established to rank companies according to the degree of their financial disclosure. This can be a great help to investors. As part of their public information plan, those in charge of capital markets can calculate the degree of the financial disclosure of different companies in different periods according to the model and use it as a criterion for decision making of their users of financial reports through their monthly and yearly Stock Exchange magazines.

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APA: Copy

MAHDAVI, GH.H., & GHASEMI, MEYSAM. (2009). THE IMPACT OF SOCIAL CONSTRUCTS SUCH AS LEGALISM, RELIANCE DEMANDING, LEVEL OF EDUCATION OF THE FINANCIAL MANAGERS, INDIVIDUALISM, GENDER, THE ACADEMIC MAJOR OF THE FINANCIAL MANAGERS, AND THE RECORDS OF THEIR SERVICE ON FINANCIAL DISCLOSURE. JOURNAL OF ACCOUNTING ADVANCES (JAA) (JOURNAL OF SOCIAL SCIENCES AND HUMANITIES), 1(1 (57/3)), 191-215. SID. https://sid.ir/paper/160425/en

Vancouver: Copy

MAHDAVI GH.H., GHASEMI MEYSAM. THE IMPACT OF SOCIAL CONSTRUCTS SUCH AS LEGALISM, RELIANCE DEMANDING, LEVEL OF EDUCATION OF THE FINANCIAL MANAGERS, INDIVIDUALISM, GENDER, THE ACADEMIC MAJOR OF THE FINANCIAL MANAGERS, AND THE RECORDS OF THEIR SERVICE ON FINANCIAL DISCLOSURE. JOURNAL OF ACCOUNTING ADVANCES (JAA) (JOURNAL OF SOCIAL SCIENCES AND HUMANITIES)[Internet]. 2009;1(1 (57/3)):191-215. Available from: https://sid.ir/paper/160425/en

IEEE: Copy

GH.H. MAHDAVI, and MEYSAM GHASEMI, “THE IMPACT OF SOCIAL CONSTRUCTS SUCH AS LEGALISM, RELIANCE DEMANDING, LEVEL OF EDUCATION OF THE FINANCIAL MANAGERS, INDIVIDUALISM, GENDER, THE ACADEMIC MAJOR OF THE FINANCIAL MANAGERS, AND THE RECORDS OF THEIR SERVICE ON FINANCIAL DISCLOSURE,” JOURNAL OF ACCOUNTING ADVANCES (JAA) (JOURNAL OF SOCIAL SCIENCES AND HUMANITIES), vol. 1, no. 1 (57/3), pp. 191–215, 2009, [Online]. Available: https://sid.ir/paper/160425/en

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