RELATIONSHIP BETWEEN ACCOUNTING DEPRECIATION AND ECONOMIC DEPRECIATION AND THE ROLE OF CONSERVATIVE REPORTING OF DEPRECIATION ON INSIDE INFORMATION

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BAHAR MAGHADAM M.; SALARI M.

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Paper Information

Journal: JOURNAL OF MANAGEMENT AND ACCOUNTIN SCHOOL Year:2013 | Volume:11 | Issue:37 Page(s): 59-80

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Information Journal Paper

Title

RELATIONSHIP BETWEEN ACCOUNTING DEPRECIATION AND ECONOMIC DEPRECIATION AND THE ROLE OF CONSERVATIVE REPORTING OF DEPRECIATION ON INSIDE INFORMATION

Author(s)

BAHAR MAGHADAM M. | SALARI M. | Issue Writer Certificate

Keywords

ACCOUNTING DEPRECIATIONQ2

ECONOMIC DEPRECIATIONQ2

CASH FLOWSQ2

FUTURE GROWTH OPPORTUNITIESQ2

Abstract

In this study the relationship between ACCOUNTING DEPRECIATION and ECONOMIC DEPRECIATION has been studied. If the equality of ACCOUNTING DEPRECIATION and ECONOMIC DEPRECIATION is demonstrated, it is expected to be a negative and statistically significant relationship between ACCOUNTING DEPRECIATION and current CASH FLOWS. But if there is conservatism in reporting depreciation, the relationship between ACCOUNTING DEPRECIATION and future CASH FLOWS is expected to be negative. The reason is that before the ECONOMIC DEPRECIATION of assets occurs, ACCOUNTING DEPRECIATION in financial reports is recognized. Usually companies adopt a more conservative approach, to be able to report better performance in the future. For this research, the multiple regression model and information of companies listed in Tehran Stock Exchange during the period 2001-2010 were used. Results showed that there is no significant relationship between current CASH FLOWS and ACCOUNTING DEPRECIATION. It can be argued that ACCOUNTING DEPRECIATION and ECONOMIC DEPRECIATION don't change proportionately. But the relationship between ACCOUNTING DEPRECIATION and future CASH FLOWS is negative and significant. Therefore it can be concluded that there is a conservative approach in reporting depreciation. And finally, in spite of the aforementioned expectations, there is Negative correlation between conservative reporting of depreciation and FUTURE GROWTH OPPORTUNITIES.

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References

A REVIEW OF RELATIONSHIP BETWEEN THE POLITICAL COSTS AND CONSERVATISM IN TEHRAN STOCK EXCHANGE

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APA: Copy

BAHAR MAGHADAM, M., & SALARI, M.. (2013). RELATIONSHIP BETWEEN ACCOUNTING DEPRECIATION AND ECONOMIC DEPRECIATION AND THE ROLE OF CONSERVATIVE REPORTING OF DEPRECIATION ON INSIDE INFORMATION. JOURNAL OF MANAGEMENT AND ACCOUNTIN SCHOOL, 11(37), 59-80. SID. https://sid.ir/paper/242265/en

Vancouver: Copy

BAHAR MAGHADAM M., SALARI M.. RELATIONSHIP BETWEEN ACCOUNTING DEPRECIATION AND ECONOMIC DEPRECIATION AND THE ROLE OF CONSERVATIVE REPORTING OF DEPRECIATION ON INSIDE INFORMATION. JOURNAL OF MANAGEMENT AND ACCOUNTIN SCHOOL[Internet]. 2013;11(37):59-80. Available from: https://sid.ir/paper/242265/en

IEEE: Copy

M. BAHAR MAGHADAM, and M. SALARI, “RELATIONSHIP BETWEEN ACCOUNTING DEPRECIATION AND ECONOMIC DEPRECIATION AND THE ROLE OF CONSERVATIVE REPORTING OF DEPRECIATION ON INSIDE INFORMATION,” JOURNAL OF MANAGEMENT AND ACCOUNTIN SCHOOL, vol. 11, no. 37, pp. 59–80, 2013, [Online]. Available: https://sid.ir/paper/242265/en

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