Ahmad Badri; Ali Ebrahimnejad; Ali Tahmasebi Torshizi
Abstract
An extensive literature examines managers’ incentives to smooth reported earnings using accruals in order to reduce price fluctuation of stocks in markets. Banks have additional incentives to engage in earnings management for a number of reasons, including tighter regulatory environment. They also ...
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An extensive literature examines managers’ incentives to smooth reported earnings using accruals in order to reduce price fluctuation of stocks in markets. Banks have additional incentives to engage in earnings management for a number of reasons, including tighter regulatory environment. They also have the ability to manage earnings using loan loss provisions (LLP). This paper examines earnings management using accruals – in particular, LLP - as the main accrual item in financial reporting of banks in the Iranian banking industry from 2005 to 2016. From previous studies, we expect that for banks with good (poor) current performance and expected poor (good) future performance, managers will save income for (borrow income from) the future by reducing (increasing) current income through LLP, especially discretionary LLP (DLLP). We also examine the effect of external financing, availability of other methods of earnings management like increasing (decreasing) non-operating income and capital requirements and also the relation of DLLP with risk. Our results indicate that bank managers do save earnings through DLLP in good times and borrow earnings using DLLP in bad times. We also find that bank risk is negatively associated with discretionary accruals.
Ali Saghafi; Mozaffar Jamalian Pour
Abstract
Classification shifting announced as new tools for earning management and become new subject for accounting research. In this article, we explore how classification shifting must measure and probe position of this tools in listed companies at Iranian stock exchange. For this purpose we gather data for ...
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Classification shifting announced as new tools for earning management and become new subject for accounting research. In this article, we explore how classification shifting must measure and probe position of this tools in listed companies at Iranian stock exchange. For this purpose we gather data for firms from 2002 to 2014. Research results show that companies used classification shifting as a tools for managing earning. Also, research explore that this tools use in trade off position from other common earning management tools. In fact firms used in order real management, accrual management and lastly classification shifting. In addition, results show that financial crisis is important factor for using this tools
Nezamoddin Rahimian; Mohammad Taghi Taghavifard; Sepideh Javadi Sofiani
Abstract
The main role of financial reporting is the effective transfer of financial information to people outside of the organization in a valid way while being ontime. This way, managers have the opportunity to judge the financial reports. This study aimed to investigate the impact of audit quality incentives ...
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The main role of financial reporting is the effective transfer of financial information to people outside of the organization in a valid way while being ontime. This way, managers have the opportunity to judge the financial reports. This study aimed to investigate the impact of audit quality incentives associated with the change of accruals in companies with high equity valuations. For this purpose, the performance of 184 companies, as a sample, during the time period of 2009-2013 was studied. In this study, the ratio of market price to earnings before extraordinary items and discontinued operations as an excess stock value measure has been used. Also, to analyze the impact of excess stock valuation on real earnings management, multivariate regression analysis considering panel data was used. The results of first hypothesis testing show that there is no significant relation between the size of audit firm and discretionary accruals. However,the results of second hypothesis testing indicate that there is a significant relationship between auditor’s tenure and optional accrual items in companies with high equity valuation. Also, the management motivation to change accruals in companies with high equity valuation is reduced.
Yahya Hassas Yeganeh; Saber Sheri; H. Khosrownejad
Volume 6, Issue 24 , January 2009, , Pages 79-115
Abstract
In order to solve the distrust problem of the moral hazard in information asymmetry issue in capital markets, corporate governance is introduced. This is an assumption that corporate governance results to a healthful life for organizations in a long horizon and protects the stockholders interests. International ...
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In order to solve the distrust problem of the moral hazard in information asymmetry issue in capital markets, corporate governance is introduced. This is an assumption that corporate governance results to a healthful life for organizations in a long horizon and protects the stockholders interests. International organizations and institutes, suggest the governance codes as a tool to develop the competition ability of corporate to access to the international capital sources, and it also affects economic and employment improvements.
This research studied some of the corporate governance mechanisms in TSE and examines the probable correlation between earning management and corporate governance mechanisms, debt ratio and firm size. The current study employs the cross-sectional modified version of Jones, where abnormal working capital accruals are used as proxy for earnings management. The study reveals that corporate governance mechanisms (board size, proportion of independent directors, competence of independent directors, separation of the roles of CEO and chairman, CEO membership, ownership structure and existence of audit dept.) have non-significant relation with earning management. It also shows that debt ratio and firm size have no significant relation with earning management.
Yahya Hassas Ycganeh; Narges Yazdanian
Volume 5, Issue 17 , April 2007, , Pages 151-171
Abstract
This research seeks to find an answer to this quest ion ''how do some corporate governance practices affect earning management in Iran?"
The investigated corporate governance principals in this research are: the percentage of institutional investors' ownership, the existence of non-executive directors ...
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This research seeks to find an answer to this quest ion ''how do some corporate governance practices affect earning management in Iran?"
The investigated corporate governance principals in this research are: the percentage of institutional investors' ownership, the existence of non-executive directors i n the board of directors, the absence (non-existence) of executive directors as the chief or ...... of board of directors, the existence or internal auditors.
In this research Jones modified model has been used to determine earning management which is measured by discretionary accruals. For this purpose, the data of l77 firms during the years 1382 to 1384 have been used. The results of this research show that when the percentage of institutional investors' ownership in firms is more than 45%,the earning management decreases. Moreover the results show that there is no meaningful correlation between the existence of non-executive directors in the board of directors, the absence (non-existence) of executive directors as the chief or ...... of board of d i rectors, the existence of internal auditors and earning management.
