stock exchange
Zahra Heidary Sureshjani; Darioush Foroughi; Alireza Rohravi Dastjardi
Abstract
Assets are crucial for companies' current and future decisions, significantly influencing investors' perceptions. This study investigates the relationship between accounting asset informativeness and investors' beliefs, with a focus on the impact of accounting earnings quality. A sample of 249 companies ...
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Assets are crucial for companies' current and future decisions, significantly influencing investors' perceptions. This study investigates the relationship between accounting asset informativeness and investors' beliefs, with a focus on the impact of accounting earnings quality. A sample of 249 companies listed on the Tehran Stock Exchange between 2013 and 2023 was selected for analysis. The results indicate that increased asset informativeness positively influences investors' beliefs at both the aggregate and discretionary levels. However, asset informativeness related to inherent factors does not impact investors' beliefs. Furthermore, low earnings quality does not weaken the relationship between asset informativeness at the aggregate level and discretionary factors with investors' beliefs.IntroductionInvestors' beliefs and expectations play a crucial role in their decision-making process and behavior. Assets are a key factor in a company's present and future decisions, significantly influencing investors' confidence. Accounting assets help reduce uncertainty about a share's true value and shape people's expectations of the company. In other words, they contain valuable information, reflecting high accounting asset informativeness. Notably, accounting asset informativeness is distinct from earnings indicators. As a result, low earnings quality does not affect investors' beliefs due to the presence of accounting asset informativeness. Therefore, earnings quality may not influence the correlation between accounting asset informativeness and investors' beliefs. Based on this, the research aims to explore the connection between accounting asset informativeness and investors' beliefs, with a focus on the influence of accounting earnings quality. The researchers propose two hypotheses: Accounting asset informativeness positively impacts investors' beliefs, and earnings quality does not moderate the influence of accounting asset informativeness on investors' beliefs.MethodologyThis study focuses on applied research. Accounting asset informativeness is the independent variable, calculated using the explanatory power of the regression of a company's net operating assets on its operating earnings. A 10-year rolling regression was conducted separately for each company. Investors' beliefs were the dependent variable, and the earnings quality served as the moderating variable. Earnings quality was determined based on four criteria: earnings stability, earnings smoothing, accruals quality, and the relationship between earnings and value. The study included a sample of 249 companies listed on the Tehran Stock Exchange, spanning from 2013 to 2023.ResultsThe information provided by accounting assets has a positive impact on investors' beliefs at both the aggregate and discretionary levels. However, this information does not affect investors' beliefs when it comes to intrinsic factors. Additionally, low earnings quality does not weaken the relationship between accounting asset information at the aggregate level and discretionary factors with investors' beliefs.DiscussionAccording to neoclassical investment theory, changes in a company's market value reflect investors' assessments of its intrinsic value based on available information. Therefore, the informativeness of a company's accounting assets can affect its stock performance. When a company's capital stock is inaccurately measured by its accounting assets, changes in market value will have a greater impact than changes in accounting assets. On the other hand, when accounting assets are measured with less error, they provide more accurate information about the company's resources. Investors use this information to estimate the market value of a company's stock and form expectations about its intrinsic value. If accounting asset informativeness is strong, investors rely on asset information to analyze the intrinsic value of the stock. It seems that even if the quality of earnings is weak, it does not significantly impact investors' decision-making. Therefore, low earnings quality cannot disrupt the relationship between accounting asset informativeness and shareholders' expectations.ConclusionBased on the findings, investors and financial statement users should consider asset informativeness when determining the true value of a share. It is important to note that financial statement information is not limited to profit and loss but also includes the measurement of assets on the balance sheet.Creditors should not focus solely on profit and loss in their debt agreement; they should also consider the company's assets as a result of its current and future decisions. It is recommended that standard setters use asset informativeness to evaluate the effects of policy changes and balance sheet asset measurement changes to improve the implementation of accounting standards.Analysts should consider asset informativeness as a fundamental factor during analysis, especially when earnings quality is low. Additionally, company managers and planners should specify the purpose of obtaining operational assets and the capacity of those assets during financial reporting to attract the attention of investors and creditors.
Financial Accounting
Mahshid Shahrzadi; Darioush Foroughi
Abstract
The Aim of this study is to introduce the left tail risk as a driver for creating idiosyncratic volatility and explainer the negative returns due to high unsystematic volatility. In addition, the present study is trying to determine how the idiosyncratic volatility puzzle occurs. In this study, univariate ...
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The Aim of this study is to introduce the left tail risk as a driver for creating idiosyncratic volatility and explainer the negative returns due to high unsystematic volatility. In addition, the present study is trying to determine how the idiosyncratic volatility puzzle occurs. In this study, univariate and bivariate portfolio analysis as well as Fama and Macbeth (1973) regression have been used. For this purpose, the information of Tehran stock exchange and Iran fara bourse companies during the years 1384 to 1398 has been used. The results of this study indicate the existence of the idiosyncratic volatility puzzle (the low (high) returns of high (low) idiosyncratic volatility stocks) and left tail risk anomaly (the low (high) returns of high (low) left tail risk) in the research sample. The idiosyncratic volatility puzzle (the low (high) returns of high (low) idiosyncratic volatility stocks) is no longer detected when idiosyncratic volatility-sorted portfolios are neutralized to left tail risk, regression control for left tail risk and factor models include a left tail risk factor. The left tail risk plays the important role to explain idiosyncratic volatility puzzle (the low returns of high idiosyncratic volatility stocks) and the reason for this explanation is the falling stock price pressure with high left-tail risk on stocks with high unsystematic volatility.
sobhan zafari; darioush foroughi; gholamhossein kiani
Abstract
The emergence of an accrual basis in the preparation of financial statements and the measurement of Accounting Earnings has led to the creation of quantitative, empirical and substantive research into the Earning Quality. Despite the extensive and contradictory research on the quality of earnings in ...
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The emergence of an accrual basis in the preparation of financial statements and the measurement of Accounting Earnings has led to the creation of quantitative, empirical and substantive research into the Earning Quality. Despite the extensive and contradictory research on the quality of earnings in the capital market, the issue of earning quality is still one of the most important issues of interest to market researchers. Some earnings research of the last decade has tended to use a qualitative approach such as text mining to provide a new measure of earnings quality. Therefore, the purpose of the present study is to investigate the impact of comparability and consistency of accounting practice on earnings quality with emphasis on qualitative text mining approach in order to provide a valid qualitative measure for evaluate earnings quality.The statistical population of the research is the companies listed in Tehran Stock Exchange .The study sample consisted of 90 companies in the period 2012-2109. was used Multivariate regression analysis to test the research hypotheses. Earnings quality in the present study was measured based on the quality of the company's accruals. Also, text mining technique (vector space model) was used to measure the consistency of accounting procedures. The results and findings of the study show that accounting comparability has a positive effect on earnings quality. The research findings and findings also confirm that by increasing the accounting consistency, the quality of the firm's earnings also increases. Key-words: accounting comparability,accounting consistency,Accrual Quality,text-mining,earning quality
darioush foroughi; Hadi Amiri; Seyed Mohammad Alsharef
Abstract
The purpose of the study is to investigate the influence of accruals on future assets’ returns and future stocks returns. Due to their estimating nature, accruals are less stable relative to cash flows; therefore, they are more influential on returns; however, financial distress may increase or ...
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The purpose of the study is to investigate the influence of accruals on future assets’ returns and future stocks returns. Due to their estimating nature, accruals are less stable relative to cash flows; therefore, they are more influential on returns; however, financial distress may increase or decrease the influence of accruals on future returns. The study sample includes 117 companies incorporated in Tehran Stock Exchange between 2006 and 2015. The findings of this study reveal that the influence of accruals on the future returns of assets in the companies suffering financial distress is less which is owing to more persistency of the accruals (much real estimations) in the companies struggling with financial distress. Furthermore, the influence of accruals on the future returns of the stocks in the companies suffering financial distress is less which is due to less abnormality of accruals (less mispricing) in companies suffering financial distress compared to companies with non-financial distress. Key words: Financial Distress, Abnormality of Accruals, Persistence Argument, Assets Returns, Stock Returns.
D. Forooghi; N. Hamidian; M. Mohammadian2F
Abstract
AbstractThe present study aims at investigating the influence of earnings quality measures on excess stock return and the capability of each one of those measures in explanation for this excess. For so doing, in the current research, eight measures for earnings quality in four total categories have been ...
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AbstractThe present study aims at investigating the influence of earnings quality measures on excess stock return and the capability of each one of those measures in explanation for this excess. For so doing, in the current research, eight measures for earnings quality in four total categories have been used: time series measures (persistence and earnings predictability), smoothness measures (volatility of earnings or accruals to operating cash flows volatility), accruals-based measures (abnormal accruals and accruals quality) and market-based measures (earnings response coefficient and value relevance). Research sample consists of 62 firms listed in Tehran Stock Exchange in time interval of 1376-1392 (1997-2013). Findings indicate that among measures for earnings quality, accruals-based measures and value relevance have negative and significant influence on the absolute of excess stock return. Time series measures, accruals volatility to operating cash flows volatility (earnings smoothing), and earnings response coefficient have significant but positive influence on the absolute of excess stock return. Furthermore, earnings volatility to operating cash flows volatility (earnings smoothing) does not have significant influence on the absolute of excess stock return. Also, among the Criteria for earnings quality, accruals-based measures have more ability than other measures in explanation of the absolute of excess stock return.
D foroghi; S.A hashemi; H amiri; S zafari
Volume 9, Issue 36 , January 2012, , Pages 149-169
Abstract
The main purpose of this research is to compare the relative informational content of operating and financing cash flows of three and five section cash flow statement in explaining future stock return. The time range of research is companies cash flow statements between 1382-1388. The population of research ...
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The main purpose of this research is to compare the relative informational content of operating and financing cash flows of three and five section cash flow statement in explaining future stock return. The time range of research is companies cash flow statements between 1382-1388. The population of research is all companies Listed in Tehran Securities and exchange, from which, a sample of 80 Iranian listed firms was chosen. The type of data needed for hypotheses testing is Pooling-Data. Unrestricted and restricted regressions were utilized to test the hypotheses. The statistical methods used consist of adjusted- R² and Wald-test statistic. Findings indicate that both operating and financing cash flow of 3-section cash flow statement have more relative informational content than the operating and financing cash flow of 5-section cash flow statement in predicting future stock return.
dariush forughi
G Babajani; D Foroghi
Volume 1, Issue 2 , July 2003, , Pages 39-60
Abstract
Social Accounting and corporate social reporting nowadays are considered as one of the important approaches of accounting. In developed and some less developed countries, several studies have been made in relation with this aspect of accounting. In our country, Iran, no scientific study related to corporate ...
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Social Accounting and corporate social reporting nowadays are considered as one of the important approaches of accounting. In developed and some less developed countries, several studies have been made in relation with this aspect of accounting. In our country, Iran, no scientific study related to corporate social reporting in order to establish conceptual framework of this part of accounting have been done so far. This research is an attempt to obtain those mentioned goals. In this research, according to results of Delphi survey, eight important and major factors were recognized as acceptable criteria for promotion of level of social accountability of Iranian enterprises accounting and financial reporting system. Comparing accepted criteria with characteristics of Iranian enterprises accounting and financial reporting system by Delphi group, determined that the above mentioned system lacks expected capability for social accountability.