Farhad Fallahnezhad; Hossien Fakhari; Shahriar Zaroki
Abstract
To explain the estimation of conservatism as a limiting covenant in accounting, the current paper discussed Basu (1997) conservatism model and Nichols (2010) generalized conservatism model and examined the problems about these models as regards the validity and generalizability of the results of ...
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To explain the estimation of conservatism as a limiting covenant in accounting, the current paper discussed Basu (1997) conservatism model and Nichols (2010) generalized conservatism model and examined the problems about these models as regards the validity and generalizability of the results of the research on this topic .Accordingly, the discussed problems were explained and the solutions for solving these problems and upgrading the model to estimate conservatism were presented. The data from 2006 to 2016 on 87 corporations were used to carry out the investigations. Also, in addition to the static routine estimator, the dynamic panel estimator (the GMM-sys method) was used to test and estimate the models. The current research results revealed that the new modified conservatism estimation model yielded more appropriate results than the original Basu model and Nichols generalized model. Moreover, it indicated that the dynamic method of model estimation is more suitable than the static one. Finally, the current research showed that the results of the previous research conducted using Basu model to measure conservatism should be considered more cautiously and their application in the capital markets calls for re-examination
Farrokh Barzideh; Afsane Ghasemi
Abstract
The present study examines the relationship between net operating assets and conservatism. To this end, the data of about 130 firms listed in Tehran Stock Exchange (TSE) from 1386 to 1390 has been collected and statistically analyzed with multiple-variable regression models based on combination data. ...
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The present study examines the relationship between net operating assets and conservatism. To this end, the data of about 130 firms listed in Tehran Stock Exchange (TSE) from 1386 to 1390 has been collected and statistically analyzed with multiple-variable regression models based on combination data. This research uses Givoly and Hayn model to define operating assets and measure conservatism. In this study net operating assets is considered to be the subcategory of net working capital and net non-current operating assets. It was hypothesized that there is the significance relationship between net working capital assets and conservatism and also between net non-current operating assets and conservatism.Findings indicate that there are no significant relationship between net working capital assets and conservatism and also between net non-current operating assets and conservatism. The results also suggest that considering conservatism, there is a significant and negative relationship between leverage, growth and return on assets.
Mahdi Moradzadehfard; Maryam Farajzadeh; Shima Karami; Morteza Adlzadeh
Volume 11, Issue 44 , March 2015, , Pages 97-116
Abstract
The purpose of this research is to examine both the relationship between accounting conservatism and level of investment under the need or no need of financing conditions and the impact of ultimate ownership on this association. The statistical society of the present research contains 103 companies selecting ...
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The purpose of this research is to examine both the relationship between accounting conservatism and level of investment under the need or no need of financing conditions and the impact of ultimate ownership on this association. The statistical society of the present research contains 103 companies selecting from all companies listed in Tehran Stock Exchange using removal method over the time span of 2006-2010. Combined data method with fixed effect has been used in order to test the research hypothesis. The result depicts that the association between conservatism and investment is significantly negative when a firm do not need external financing. Nonetheless, this association is significantly positive in companies which need external financing. Furthermore, we find that the relationship between conservatism and investment in the companies whose ultimate ownerships controller is governmental or semi governmental firms is significantly negative. Thus, when the agency problem is enhancing, conservatism acts as a mechanism to decrease this problem and engenders reduction in investment cost
Mahdi Moradzadeh Fard; Maryam Farajzadeh; Shima Karami
Abstract
The purpose of this research is to examine both the relationship between accounting conservatism and level of investment under the need or no need of financing conditions and the impact of ultimate ownership on this association. The statistical society of the present research contains 103 companies selecting ...
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The purpose of this research is to examine both the relationship between accounting conservatism and level of investment under the need or no need of financing conditions and the impact of ultimate ownership on this association. The statistical society of the present research contains 103 companies selecting from all companies listed in Tehran Stock Exchange using removal method over the time span of 2006-2010. Combined data method with fixed effect has been used in order to test the research hypothesis. The result depicts that the association between conservatism and investment is significantly negative when a firm do not need external financing. Nonetheless, this association is significantly positive in companies which need external financing. Furthermore, we find that the relationship between conservatism and investment in the companies whose ultimate ownerships controller is governmental or semi governmental firms is significantly negative. Thus, when the agency problem is enhancing, conservatism acts as a mechanism to decrease this problem and engenders reduction in investment cost.
Esfandiyar Malekian; Farazandeh Abdipoor
Volume 11, Issue 41 , April 2014, , Pages 157-173
Abstract
Studies regarding of auditor rotation due to the effects on auditor independence and audit quality, is very important. Auditor independence affects auditor – client relationship and finally will be useful to audit quality and earning conservatism. The present research examines the relation between ...
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Studies regarding of auditor rotation due to the effects on auditor independence and audit quality, is very important. Auditor independence affects auditor – client relationship and finally will be useful to audit quality and earning conservatism. The present research examines the relation between audit firm rotation and earnings conservatism. In this research for conservative representation of the profit before tax is applied. By examining 63 companies listed in Tehran Stock Exchange during the period 1384-1389 and using multiple linear regression analysis, The results indicated a direct and significant relation between audit firm rotation and reporting earnings Conservative Companies listed on the Tehran Stock Exchange. The findings of this study revealed that by audit firm rotation increases conservatism in reported earnings The companies listed in Tehran Stock Exchange.
Ghasem Blue; Mahdi Falah Barandagh
Volume 10, Issue 39 , October 2013, , Pages 57-82
Abstract
This research follow up the relation between conservatism and short term abnormal returns of IPOs in Tehran Stock Exchange and also infusing of asymmetry information among beneficiaries in IPO’s procedure in mentioned relation. The results of regression analysis for companies which their stocks ...
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This research follow up the relation between conservatism and short term abnormal returns of IPOs in Tehran Stock Exchange and also infusing of asymmetry information among beneficiaries in IPO’s procedure in mentioned relation. The results of regression analysis for companies which their stocks offered in Tehran Stock Exchange for period of 1382 to 1391 shows the relation between conservatism and short term abnormal returns of IPOs is meaningful and reverse. In the other word by increasing the level of conservatism, verifiability of presented information has been gone up and by decreasing of asymmetry information among beneficiaries in IPO’s procedure; short term abnormal return of this stock will be decrease. In the other hand the relation between conservatism and short term abnormal returns of IPOs in companies with high level of asymmetry information is stronger than companies with low level of asymmetry information.Also the results of research show the IPOs’ stocks have created averagely 26.07% Initial normal returns and 19.61% Initial abnormal returns (Returns adjusted by Market Portfolio) that confirmed the under pricing in Tehran Stock Exchange according to researchers in other countries.
A. Kbodamipour; R. Mahroomi
Volume 8, Issue 30 , July 2010, , Pages 79-98
Abstract
The purpose of this study is to investigate the existence of conservatism and its effect on value relevance of accounting information. The methodology of present study is quasi experimental. The statistical society includes companies accepted in Tehran Stock Exchange, and the time span of the study is ...
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The purpose of this study is to investigate the existence of conservatism and its effect on value relevance of accounting information. The methodology of present study is quasi experimental. The statistical society includes companies accepted in Tehran Stock Exchange, and the time span of the study is from the beginning of 2000 up to the end of 2008. The Basu Model was exploited for investigating and assessment of the extent of conservatism in sample companies and for the investigation of value relevance of accounting information, the present study made use of Easton & Harris Model. The results are indicative of the presence of conservatism. Furthermore it was observed that as we descend from companies with low conservatism to companies with medium conservatism, the value relevance of accounting information increases; although the mentioned increase is not perceptible, value relevance of accounting information decreases a great deal when moving from companies, medium in conservatism toward companies with high conservatism. Consequently there cannot be found a clear relevance between conservatism and value relevance of accounting information.
N. Rahimian; M. Salehirad; H. Mohammadi
Volume 8, Issue 30 , July 2010, , Pages 127-149
Abstract
This paper investigates the relationship between Accounting Conservatism and Bankruptcy Risk in Tehran Stock Exchange (TSE). To do so, the sample firms have been divided into two groups: bankrupting firms and non-bankrupt firms. It is assumed that firms subject to the article 141 of the amendment to ...
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This paper investigates the relationship between Accounting Conservatism and Bankruptcy Risk in Tehran Stock Exchange (TSE). To do so, the sample firms have been divided into two groups: bankrupting firms and non-bankrupt firms. It is assumed that firms subject to the article 141 of the amendment to Commercial Law, for two years, are more vulnerable to bankruptcy. Using the Feltham and Ohlson model (1995) to measure conservatism, the sample firms have been analyzed in two steps: first, firms vulnerable to bankruptcy, second non-bankrupt firms and then all sample firms. The results of our sample of 222 firms listed in TSE; show that conservatism is dominant in all firms and years. Second, conservatism is lower in bankrupting firms.
Mohsen Khoshtinat; Fereshteh Yoosefi
Volume 5, Issue 20 , January 2008, , Pages 37-59
Abstract
This paper studies the relationship between information asymmetry and accounting conservatism in financial statements. Information asymmetry between informed and uninformed equity investors creates an agency cost that ...
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This paper studies the relationship between information asymmetry and accounting conservatism in financial statements. Information asymmetry between informed and uninformed equity investors creates an agency cost that increases the equilibrium return on the firm's equity. This effect gives parties to the firm an incentive to generate a mechanism that reduces information asymmetry. In the other hands Conservatism reduces the manager's incentives and ability to manipulate accounting numbers and then reduces the agency costs.
Our empirical tests express that information asymmetry among equity investors is significantly positively related to conservatism. Further our tests confirm that changes in information asymmetry between equity investors lead changes in conservatism but conservatism doesn't lead to information asymmetry.
This result rejects the FASB proposition that conservatism produces information asymmetry among investors.
Ali Saghafi; Javad Rezazadeh
Volume 1, Issue 1 , April 2003, , Pages 3-39
Abstract
This study examines the relationship among the cultural values of Iranian society, disclosure and conservatism degree of Iranian firms in presentation of financial statements. It is argued that an empirical relation exist between the cultural value, as conceived by Hofstede’s theory of the four ...
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This study examines the relationship among the cultural values of Iranian society, disclosure and conservatism degree of Iranian firms in presentation of financial statements. It is argued that an empirical relation exist between the cultural value, as conceived by Hofstede’s theory of the four dimensions of cultural values (power distance, uncertainty avoidance, individualism, and masculinity) and the accounting values are captured by Gray’s two dimension (conservatism and secrecy). 64 corporate annual reports registered on Tehran Stock Exchange (TSE) were examined in order to determine whether culture values correlate with the degree of conservatism and level of disclosure. The results in general support the theoretical expectations.
