Accounting report
Jafar Babajani; Mohammad Javad Salimi; Mhammad taghi Taghavi fard; Ehsan Mohebi
Abstract
Regional Electric companies are organizations that pursue both social and financial goals in order to fulfill their assigned missions, so fulfilling accountability for their dual goals is of fundamental importance. In this research, by examining the information needs of the users of the financial reports, ...
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Regional Electric companies are organizations that pursue both social and financial goals in order to fulfill their assigned missions, so fulfilling accountability for their dual goals is of fundamental importance. In this research, by examining the information needs of the users of the financial reports, the factors affecting the financial reporting of the sector have been studied. The aim of this research is to present a model for the environmental conditions and characteristics of regional electric companies in Iran. For this purpose, the required data, after a library study and exploratory search in the theoretical foundations and financial and accounting rules and regulations governing the relations of these entities, were collected using a questionnaire and analyzed using the fuzzy Delphi research method and appropriate statistical tests. The evidence from the analysis of the respondents’ views shows that the influencing factors are in four dimensions, including the compatibility of the model in achieving the organization's goals, the needs of information users, compliance with financial and accounting laws and regulations, and finally, budget control and credit status reporting. Experts also agree on the factors proposed by this research for designing and explaining the financial reporting model of regional power companies in Iran.Introduction The government and other public sector institutions provide many goods and services essential to society. One of the most significant areas in which the government engages in commercial activities is the energy sector, particularly the electricity industry, which plays a key role in social and economic development and in improving the quality of life in society. The financial resources of the country’s regional electricity companies are derived from various sources and must be utilized for specific purposes in compliance with various laws and regulations.Given the fundamental importance of performance and the evaluation of accountability by authorities to stakeholders in democratic governments, it is necessary to produce clear and reliable reports on how resources are allocated and consumed in different areas. This research seeks to identify the weaknesses and shortcomings of the financial statements of these institutions by reviewing existing literature and employing other methods. Ultimately, the study presents a suitable model for the financial reporting of these institutions, enabling improved accountability and more effective economic decision-making.Research QuestionWhat is the financial reporting model of Iran's regional electricity companies?Literature ReviewSayedi and Babajani (2011) conducted research with the aim of achieving a desirable model of financial reporting in Islamic capital markets. The findings of their research confirmed the usefulness of relying on the fund theory to achieve reporting goals. The result of their study led to a financial reporting model in which the central focus is not the economic entity but rather the main business activities and departments of the company.Babajani and Shekarkhah (2012), using the Delphi method, investigated the appropriate accounting model for Islamic banking in Iran. According to their findings, the accounting system used by experts was unable to meet user needs and required changes, the generalities of which were presented as key factors in the proposed research model. Additionally, the research indicated that a conceptual framework based on accountability is more suitable than one based on decision-usefulness for financial reporting in the usury-free banking system.Mohammadi et al. (2020), in their research to develop a desirable model of financial reporting in the public sector, addressed the key factors influencing public sector financial reporting. The results showed that the quality of public sector financial reporting is influenced by factors such as budgeting structure, public sector infrastructure, the quality of human resources, the accounting system and basis, education, and the accountability system governing society. Weaknesses identified in the research include poor implementation of accrual accounting, incomplete implementation of operational budgeting, political influence in decision-making processes, lack of access to the annual budget performance statement and budget deduction report, and non-identification of certain financial statement items.MethodologyThe current research is an applied and developmental study. It aims to analyze existing conditions and assist in the decision-making process, classifying it as descriptive research. Furthermore, since it seeks to gather the opinions of a large statistical community on the research subject, it is categorized as descriptive-survey research.Using the fuzzy Delphi method, the statistical population includes experts selected based on three criteria: the presence of representatives from expert groups, deep knowledge of the research topic, and breadth of opinion and expertise. These experts were chosen from groups such as auditors, the head of the State Court of Audit, auditors of executive bodies, directors of audit organizations, and academic faculty members with relevant experience. Participants were selected through snowball sampling.Initially, to identify the dimensions, components, and indicators of the Financial Reporting Model for Regional Electric Companies in Iran, a review of the subject literature was conducted. After identification, examples of these cases in the public sector were examined based on expert opinions. Given the advantages of the fuzzy Delphi method (29FDM) compared to the traditional Delphi method (30TDM), the fuzzy Delphi method was employed in this research.ResultsBy examining the needs of users and the current state of financial reporting for regional electric companies, which is affected by several factors, it was found that the financial reporting models of private sector for-profit institutions cannot fully address the information needs of users in this sector. The findings of this research revealed that the operating environment and user needs in this sector differ significantly from those of private-sector for-profit institutions. These differences have created challenges in aligning the information needs of users with the form and content of the current financial reports, leaving report users facing difficulties.In this research, by identifying and analyzing the factors influencing an appropriate financial reporting model for Iran's regional electric companies, a step has been taken to better meet the information needs of users. Identifying the set of influencing factors for the proposed model, in accordance with the conditions and laws governing the financial and accounting systems of this sector, and determining the importance of each factor in the desired framework are among the key findings of this research effort.DiscussionAccording to the findings of the research, the consistency of the model in reporting the degree of achievement of the set goals of regional electric companies, the consistency in supporting the goals of information users, its compliance with financial and accounting rules and regulations, as well as budget control and credit status reporting, were identified as the effective dimensions of the reporting model. Each of these dimensions comprises several components and indicators.ConclusionThis research aimed to present a financial reporting model for Regional Electric Companies in Iran. Using the fuzzy Delphi method and based on expert opinions, the dimensions, components, and indicators of the proposed model were identified and presented.
Accounting report
Mohammad Javad Salimi; Ghassem blue; Maghsoud Amiri; Hamed Zakeri
Abstract
The earnings forecasts report is considered as one of the most important and effective reports in investors' decision-making. The purpose of this study is to present an earnings forecasts reporting framework in Iran's capital market. To achieve this research goal, the earnings forecasts reporting framework ...
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The earnings forecasts report is considered as one of the most important and effective reports in investors' decision-making. The purpose of this study is to present an earnings forecasts reporting framework in Iran's capital market. To achieve this research goal, the earnings forecasts reporting framework was identified first by studying the theoretical foundations and the background of the research, as well as interviewing 21 experts using the snowball method and the theme analysis method. Then, through the implementation of the fuzzy Delphi method and solicitation of opinions from 183 experts using a questionnaire and targeted judgmental sampling method, a consensus was reached on the reporting framework, resulting in the presentation of the earnings forecasts reporting framework in Iran's capital market. The research population included university faculty members, employees in regulatory organizations, investors, auditors, and providers of financial information. The research results showed that out of 122 detailed themes extracted through theme analysis, categorized into six main themes and 14 sub-themes, 97 detailed themes obtained the consensus among the Delphi group, thereby forming components of the earnings forecasts reporting framework. The main elements of the earnings forecasts reporting framework encompass generalities, environmental fields, characteristics, consequences, challenges, and evaluation. The findings of this research can serve as a guide for developing financial reporting standards and modifying procedures and regulations.IntroductionThe management forecasts earnings is one of the disclosed information outside the financial statements, which reflects the management's forecast about the future prospects. This report is one of the most important sources of information for companies in the capital market. Corporate management possesses considerable information advantages about contingencies related to future profitability. Management disclosures are considered a valuable and potential source of information for investors. Investors are interested in estimating the future benefits of their investment so that they can assess receiving future cash earnings as well as the value of their shares. Therefore, the expected earnings from companies are important for investors and beneficiaries to make investment decisions.How to present the earnings forecast report has been a challenging issue in recent years. Therefore, in the current situation, examining the framework and reporting method of earnings forecasting in the Iranian capital market using the opinions of experts is regarded as an essential need.Considering the importance of earnings forecast reporting for investors, the problem of the current research is: What is the earnings forecast reporting framework in Iran's capital market? Additionally, what are the components of this framework based on the country's economic and capital market conditions? Literature ReviewThere are several reasons for disclosing the information of managers and publishing the earnings forecast report. One reason for this is agency theory, which refers to the conflict of interests between managers and owners. In addition, we can refer to the Signaling theory, Expectation adjustment hypothesis, and Legal liability hypothesis.The primary framework of earnings forecasting reporting includes the purpose, users, limitations, environmental fields, characteristics, and consequences.Hirst et al. (2008) provided a framework regarding management earnings forecasting. They categorized earnings forecasts into three components including antecedents, characteristics, and consequences. They concluded that earnings forecasting characteristics are less explored in both theoretical and empirical research, despite managers having the most control over this component.Preussner and Aschauer (2022) synthesized the literature on management earnings forecasts and adaption mechanisms, combined existing theories into a unifying framework. Overall, the literature review provides strong support for a positive correlation between the extent and credibility of management earnings forecasts, on the one hand, and stock returns, share liquidity, and analyst coverage, on the other hand. Earnings forecasts tend to be optimistically biased, with a positive correlation with forecast uncertainty, earnings flexibility, financial distress, investor sentiment, and the share price dependency of managers' remuneration. Firm growth, legal liability, and litigation risk are significantly associated with forecast pessimism.Until 2017, listed companies in Tehran Stock Exchange published an independent report titled earnings forecasts report. The Securities and Exchange Organization announced in a notification that since January 2018, the Issuers are not allowed to publish earnings forecasts report. Instead, they are required to prepare and disclose the management's interpretive report alongside the interim and annual financial statements. Recently, as of July 2021, the return of the earnings forecast report was announced with a new procedure for five industries.MethodologyTo achieve the goal of the research, the primary framework was first identified by studying the literature review and theoretical background. Semi-structured interviews were then conducted with 21 experts using the snowball sampling method. The data from the interview was analyzed using the theme analysis method and the earnings forecasts reporting framework was extracted according to the country's environmental characteristics. Finally, the fuzzy Delphi method was implemented and opinions were gathered from 183 experts through a questionnaire and targeted judgment sampling method to reach a consensus on the earnings forecasts reporting framework.The statistical population of the research included university faculty members, employees in regulatory organizations, investors, auditors, and providers of financial information.ResultsThe research results showed that out of 122 detailed themes extracted through theme analysis, which were categorized into 6 main themes and 14 sub-themes, 97 detailed themes obtained consensus from the Delphi group and were identified as components of the earnings forecasts reporting framework. The main themes of the framework are generalities, environmental fields, characteristics, consequences, challenges, and evaluation. Each main theme consists of sub-themes. For example, the generalities theme includes sub-themes such as purpose, users, and limitations. The environmental fields theme covers aspects related to the forecast environment and company characteristics. The characteristics theme encompasses the method of publishing, features, text of the report, and assurance. The consequences theme addresses the consequences of publishing and non-publishing. The challenges theme explores the challenges in the environment and the company. Lastly, the evaluation theme focuses on the evaluation of the disclosure procedure.DiscussionThe findings of this research can serve as a valuable guide for developing financial reporting standards and modifying procedures and regulations.The paper has some limitations. The use of questionnaires, which is common in humanities research, is inherently limited, and this research is no exception. The time limitation, the diverse knowledge base of the experts, and their interest in the research topic may have influenced the quality of the experts' responses to the questionnaire.ConclusionThis research has presented the earnings forecasts reporting framework in Iran's capital market, consisting of 6 main themes. The results of this study can help Iran's Accounting Standards Development Committee in developing standards. Furthermore, the Securities and Exchange Organization can use the framework, particularly for the evaluation theme to modify and present regulations related to earnings forecasting reporting. Additionally, investors can use the results of this research to enhance their understanding about the earnings forecast report and make more informed investment decisions. Issuers can also use the framework to improve information disclosure and prepare reports.AcknowledgmentsI am grateful to all the esteemed professors and experts who helped me in this way. I would also like to express my gratitude to the staff of Allameh Tabataba’i University for their cooperation.
Javad Alizadeh; Javad Dustjabbarian
Abstract
The herd behavior of investors is of the most noticeable issues in finance. Herd behavior could lead to an increase in volatility of share prices and its deviation from intrinsic value. There have been some investigations on this issue in recent years which prove the presence of herd behavior in the ...
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The herd behavior of investors is of the most noticeable issues in finance. Herd behavior could lead to an increase in volatility of share prices and its deviation from intrinsic value. There have been some investigations on this issue in recent years which prove the presence of herd behavior in the Tehran Stock Exchange. However, few of them seek to study the impact of various stock traits on investors’ behavior. This study aims to regard the idiosyncratic risk as a possible determinant of herding and consider its impact on the extreme market condition, up and down markets. Using companies listed in Tehran Stock Exchange between 1388 to 1394(Iranian calendar), the results demonstrate that the idiosyncratic risk could intensify the herd behavior of investors in extreme down markets. In addition, for stocks with lower idiosyncratic risk, herding could be observed in down markets.
Abolfazl Jafari; Mohammad Javad Salimi; Jafar Babajani
Abstract
One of the essential needs for Iranian financial market participants (including money market and capital market participants) is rating them based on their financial strength rating. This rating help stakeholders, including shareholders, investors, customers, central bank and etc., to obtain more accurate ...
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One of the essential needs for Iranian financial market participants (including money market and capital market participants) is rating them based on their financial strength rating. This rating help stakeholders, including shareholders, investors, customers, central bank and etc., to obtain more accurate information regarding inherent safety and soundness of Iranian banks. So the aim of this study is rating Iranian banks, based on financial strength, certainly whose listed on the Tehran Stock Exchange (TSE) and Iran OTC market. All under studied banks were separated into two groups of privatized and non-governmental banks. The period of the research is 5 years from 2012 to 2016. For this purpose, first a financial strength score was determined for each of the banks by using a reflective component-based model which is constructed from 4 dimensions, 8 factors and 51 indicators, Then the banks was ranked based on their financial strength scores in two separate groups of privatized and non-governmental banks. The results show that privatized banks compared with non-governmental banks have higher financial strength scores. In the group of privatized banks, Bank Mellat had the highest score and hence the highest rank in terms of financial strength. In the group of non-governmental banks, Bank Pasargad, Parsian Bank and EN bank, respectively had the highest scored and hence the highest ranks in terms of financial strength.
