Accounting report
Ali Saqafi; Ghasem Blue; HosseinAli Sohrabi Varzaneh
Abstract
Development of Earnings quality measures, especially Accruals quality measures, has been a critical line of research over more than three decades. Literature indicates that linear-regression-based measures are subject to (suffer from) significant estimation error in non-discretionary accruals estimation. ...
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Development of Earnings quality measures, especially Accruals quality measures, has been a critical line of research over more than three decades. Literature indicates that linear-regression-based measures are subject to (suffer from) significant estimation error in non-discretionary accruals estimation. Therefore, recent research used machine learning algorithms including multilayer perceptron and radial basis neural networks, in order to address the issue. However, being founded on Blackbox approach limits future development and applicability of these methods. So, to address the limitations, we have used Group Method of Handling Data (GMDH) approach, as a Whitebox approach, in order to estimate the accruals. Findings using data from 299 Tehran Securities Exchange listed companies during 1385 to 1397 suggests that GMDH-based models perform superior to regression models and multilayer perceptron neural networks in terms of estimation error measured by mean squared error. Moreover, Cash flow approach in total accruals calculation leads to less estimation error compared to balance sheet approach. As a result, the model developed in this article can be used by market participants such as regulators, analyst and auditors in order to detect probable financial reporting misstatements.
Financial Accounting
Reza Taghizadeh; Mohammad Abdzadeh Kanafi; alieh ghermezi
Abstract
This study examines earnings quality in the relations network of the board of directors of companies in the Iranian stock market in the period 2011 to 2020. This study has a quantitative approach that is post-event in terms of implementation. Furthermore, it is based on graphic techniques on graph theory. ...
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This study examines earnings quality in the relations network of the board of directors of companies in the Iranian stock market in the period 2011 to 2020. This study has a quantitative approach that is post-event in terms of implementation. Furthermore, it is based on graphic techniques on graph theory. Network analysis and regression analysis were used to conduct research tests. Findings showed that in the communication network of companies, some of them are in a better position and have more access and effectiveness. Better location can lead to easier access to information and resources faster. Also, the results of testing the hypotheses showed that there is no significant relationship between the betweenness centrality, and earnings quality. But there is a significant negative relationship between the degree centrality and earnings quality and a significant positive relationship between the closeness centrality, and the earnings quality. In other words, it can be said that the position in the structure of relationships can somehow affect earnings quality of companies.
Abbas Aflatooni; Zahra Nikbakht
Abstract
One of the firms’ tools to provide a low-risk image is adopting a persistent dividend policy. However, it should be noted that due to financial constraints, many firms are unable to implement this policy in the long run. This research investigates the role of earnings quality in adopting a persistent ...
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One of the firms’ tools to provide a low-risk image is adopting a persistent dividend policy. However, it should be noted that due to financial constraints, many firms are unable to implement this policy in the long run. This research investigates the role of earnings quality in adopting a persistent dividend policy in 148 firms listed in Tehran Stock Exchange (TSE) (includes 1628 observations) during 2007-2017. To measure earnings quality, I use five proxies and to investigate their role in adopting a persistent dividend policy, I employ partial adjustment model and dividends adjustment speed concept. To estimate the models, I apply the Generalized Method of Moments (GMM) with system estimator. The research results show that compared with other firms, firms with lower total accruals, lower discretionary accruals, higher accruals quality, smoother earnings and higher overall earnings quality, are more able to conduct a persistent dividends policy. The research results using differenced-GMM estimator confirm the research primary results. These findings are consistent with the predictions of the signaling theory
Mohammad kashanipour; Gholamreza Karami; Mohsen Moradi Joz
Abstract
Because of the importance and position of earnings in financial reporting information, this study is an attempt to present a model for ranking earnings quality drawing an expert's view. The present study aims to provide a model for earnings quality in Iran. After reviewing the theoretical literature ...
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Because of the importance and position of earnings in financial reporting information, this study is an attempt to present a model for ranking earnings quality drawing an expert's view. The present study aims to provide a model for earnings quality in Iran. After reviewing the theoretical literature and sources of earnings quality, a conceptual model and research questionnaire were developed. Based on the conceptual model developed, three aspects of accounting, market and management were selected as dimensions of the model. Each of these dimensions is of the following measures (8 measures for accounting, 5 measures for market, and 3 measures for management). The research questionnaire was submitted to 21 experts in the field of accounting and financial management with sufficient experience and academic background in the field in question. Using the analytic hierarchy process (AHP) and the technique for order of preference by similarity to ideal solution (TOPSIS), the results were analyzed and the final model of the research was extracted. In this model, drawing on the scientific method for the analysis of the results, the weight of each dimension and measurement was determined. The results show that the accounting, market, and management dimensions have coefficients of 0/581, 0/295, and 0/124 respectively, affecting the earnings quality model. Also, the consistency ratio in the analytic hierarchy process for all dimensions is less than 10%, hence acceptable. Moreover, the results indicate that earnings in formativeness as a subset of market dimension is the most influential measure in the final model of earnings quality.
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.
Hojat Saydi; Marjaneh movahedpour
Abstract
Because of specific characteristics of companies in specific industries such asconstruction industry, whose operation cycles are usually more than one fiscal year,there are different methods and policies for revenue recognition. Errors inaccounting estimates in specific industries reduce the usefulness ...
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Because of specific characteristics of companies in specific industries such asconstruction industry, whose operation cycles are usually more than one fiscal year,there are different methods and policies for revenue recognition. Errors inaccounting estimates in specific industries reduce the usefulness of accountinginformation. It makes reported profit in the financial statements vary from actualearnings and consequently causes volatility in companies’ stock prices. In thisresearch we examine Specific Factors Affecting Earnings Quality and Stock Pricesin Construction Industry. In this regard, a sample of 126 manufacturing companiesand 11 Construction companies listed in Tehran stock exchange over the period of2007- 2012 have been selected. In this study two main hypotheses and two subhypothesisto intensification the reliability were developed. The first mainhypothesis results show Earnings response coefficients in Construction companiesare weaker than manufacturing companies. The result of the second mainhypothesis shows there was no significant difference between stock prices aftergeneral assembly and stock prices before general assembly because of dividends orother factors. The first sub-hypothesis results shows operating cash flow can bepredicted by operating profit in Construction Companies, but the adjustedcoefficient determination indicate the relationship is too weak. The second subhypothesisresults indicate nonlinear relation between stock prices and earnings pershare. The main result of this research shows that in pricing of ConstructionCompanies in capital markets, dividend factor is much weaker than othercompanies’ share pricing, and so other factors like net current asset value,replacement cost and etc play significant role in pricing.
Ahmad Ahmadpoor; asoomeh hahsavari
Volume 11, Issue 41 , April 2014, , Pages 37-58
Abstract
This study investigates how management Authority of bankrupt firms performs in reporting future profitability and earnings quality effect in Tehran Stock Exchange during 1385-1390. Discretionary accrual is considered as measure of earnings management. Also in this study, it is investigated the effect ...
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This study investigates how management Authority of bankrupt firms performs in reporting future profitability and earnings quality effect in Tehran Stock Exchange during 1385-1390. Discretionary accrual is considered as measure of earnings management. Also in this study, it is investigated the effect of accounting-based earnings attributes on future profitability separately: accruals quality, earnings persistence, earnings predictability, and earnings smoothness. The results of estimating unbalanced panel data technique for 55 firms subjected to bankruptcy of Altman's model show that the Bankrupt companies tend to be opportunistic earnings management. We also find that earnings management performs better than earnings quality in predicting future profitability.
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.
A Rahmani; A Najaf Toumrai
Volume 9, Issue 34 , July 2012, , Pages 33-54
Abstract
This study examine the association between accounting restatements and the pricing of information risk in companies listed in Tehran Stock Exchange. And the period of the study is from 1384 uo to 1389.Using the Fama and French three-factor model augmented with discretionary and innate information risk ...
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This study examine the association between accounting restatements and the pricing of information risk in companies listed in Tehran Stock Exchange. And the period of the study is from 1384 uo to 1389.Using the Fama and French three-factor model augmented with discretionary and innate information risk factors, we find a significant increase in the factor loadings on the discretionary information risk factor for restatement firms after a restatement announcement.We study several potential determinants of the change in information risk pricing and find evidence consistent with the core account restatements and the number of times a firm restates affecting the change in the pricing of innate information risk.
K Maham; A-M Alimohammadi
Volume 9, Issue 34 , July 2012, , Pages 129-149
Abstract
This study investigates whether dividend paying status is associated with the Quality of earnings. Four measures are defined as proxies for earnings Quality; discretionary accruals, standard deviation and absolute magnitude of the accruals errors, and value relevance.To test the hypotheses, 450 year ...
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This study investigates whether dividend paying status is associated with the Quality of earnings. Four measures are defined as proxies for earnings Quality; discretionary accruals, standard deviation and absolute magnitude of the accruals errors, and value relevance.To test the hypotheses, 450 year firms were selected from companies listed in Tehran Securities Exchange (TSE) during 2005 to 2011. We used a multiple linear regression model. Findings show that firms with dividend paying have (1) lower absolute values of discretionary accruals; (2) lower absolute magnitude of the errors associated with the mapping of accruals into cash flows; and (3) more value relevant earnings. But results is not significant for standard deviation of the accruals errors. Larger dividends strengthen the positive association between dividend paying status and earnings quality.
Mohsen Dastgir; Seyed Mahdi ParchiniParchin; Keivan Sheikhi
Volume 8, Issue 32 , January 2011, , Pages 1-22
Abstract
The aim of this research is to investigate the effect of the earnings quality on improving the stock liquidity of listed companies in TSE. In this study, the earnings quality based on earnings stability, and two transactional criteria (the trading days and the ratio trading volume) and two informational ...
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The aim of this research is to investigate the effect of the earnings quality on improving the stock liquidity of listed companies in TSE. In this study, the earnings quality based on earnings stability, and two transactional criteria (the trading days and the ratio trading volume) and two informational criteria (the ratio depth and ratio spread) used to measure of the stock liquidity. To conduct this research, 94 listed companies in TSE during 2002-2011 via panel regression models (fixed effects) were investigated.
Findings indicate that there are not significant relationships between the earnings quality and different criteria of the stock liquidity.
M. Azimi Yancheshmeh
Volume 8, Issue 30 , July 2010, , Pages 99-126
Abstract
This paper investigates earnings quality with a balance sheet approach. Earnings quality has various definitions. One of them is Earnings persistence. It means that the company has more ability for maintaining current earnings. We compared accrual component persistence with cash component. We introduced ...
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This paper investigates earnings quality with a balance sheet approach. Earnings quality has various definitions. One of them is Earnings persistence. It means that the company has more ability for maintaining current earnings. We compared accrual component persistence with cash component. We introduced a comprehensive definition of accruals for measuring the accrual component persistence of earnings. Our population includes listed companies in Tehran Stock Exchange (TSE) for the period 1380 to 1387. We analyzed a sample of 141 companies. In contrast to prior researches, our findings don't confirm less accrual component persistence of earnings in compare with cash component of earnings.
A. Saghafi; M. Marfou
Volume 8, Issue 29 , April 2010, , Pages 1-37
Abstract
Based on prior research conducted in different countries, the quality of information provided by the accounting system could affect the stock liquidity risk. In general terms, higher quality of information causes lower liquidity risk.
This paper clarifies the relationship between earnings quality and ...
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Based on prior research conducted in different countries, the quality of information provided by the accounting system could affect the stock liquidity risk. In general terms, higher quality of information causes lower liquidity risk.
This paper clarifies the relationship between earnings quality and stock liquidity risk. Selected earnings quality criteria are including relevance, reliability, persistency and smoothness of accounting earnings.
Period of six years from the beginning of 1383 (2004) till the end of 1388 (2009) is applied and the sample includes 62 companies among listed companies in Tehran Stock Exchange. Multivariate regressions for statistical analysis coupled with eight control variables (size, ratio of book to market value, the institutional investors' ownership percentage, stock returns, stock volatility and triple risk coefficients Fama - French model) is used in the models. Findings has shown that there is significant relationship between relevance, reliability and smoothness of reported accounting earnings with stock liquidity risk, and higher quality of reported earnings causes lower liquidity risk.
Therefore, it can be argued that the quality of disclosed accounting information has a role in the reduction of stock liquidity risk.
G. Boulou; Y. Hassas Yeganeh; R. Harasani
Volume 8, Issue 29 , April 2010, , Pages 65-95
Abstract
This paper investigates earnings quality’s trend in Tehran stock exchange listed companies over the period 1380-1387 using a sample of 64 companies in 4 industries. In this paper, earnings quality was measured across 4 dimensions: accruals quality, earnings persistence, earnings predictability ...
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This paper investigates earnings quality’s trend in Tehran stock exchange listed companies over the period 1380-1387 using a sample of 64 companies in 4 industries. In this paper, earnings quality was measured across 4 dimensions: accruals quality, earnings persistence, earnings predictability and smoothness. The results provided no evidence of decline in earnings quality over the sample period. Further statistical analysis showed that the earnings quality data are descriptive of a random walk model. Only regressing the measures of earnings quality on time provided some evidence of slight improvement in accruals quality in one of the industries.
S.H. Sajadi; R. Takor; A. Mahmoudi
Volume 8, Issue 29 , April 2010, , Pages 115-137
Abstract
Earnings quality is discussed by multiple dimensions. The purpose of this paper is to study the relationship between institutional investors and earnings quality using the Financial Accounting Standards Board's conceptual framework (including, Predictive value or feedback value, Neutrality, Timeliness, ...
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Earnings quality is discussed by multiple dimensions. The purpose of this paper is to study the relationship between institutional investors and earnings quality using the Financial Accounting Standards Board's conceptual framework (including, Predictive value or feedback value, Neutrality, Timeliness, Representational faithfulness) as a basis. A sample of 80 listed companies in Tehran Stock Exchange (TSE) for the period of 1384-1387 has been selected. Hypotheses have been tested using ordinary least square (OLS) with pooled data. The results show that, institutional investors have a positive relationship and significantly with predictive value or feedback value and representational faithfulness. Also, institutional investors have a positive relationship and significantly with timeliness. Finally, institutional investors have not relationship with the absolute value of abnormal accruals (ABNAC).
Mohsen Khoshtinat; Sbahpoor Esmaeeli
Volume 3, Issue 12 , January 2006, , Pages 27-56
Abstract
This research undertakes the relationship between earnings quality and stock return of the listed companies in the Tehran Stock Exchange.
The aim of this research is to assess whether the investors, analysts, and etc. have comprehend the quality of the accountancy information (earnings quality) and ...
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This research undertakes the relationship between earnings quality and stock return of the listed companies in the Tehran Stock Exchange.
The aim of this research is to assess whether the investors, analysts, and etc. have comprehend the quality of the accountancy information (earnings quality) and utilize it in their decision making process? In order to find the answer to this question we need to take in to account the market reaction.
We can assess and evaluate the market reaction with the use of the accumulated data published and in the following two ways:
1- Volume of transactions
2- Share price and subsequently the stock return
Therefore in this research stock return is an independent variable.
Within the earnings quality assessment criteria, two criteria, the ratio between cash flows resulted from operational activities with operational earning and accruals , are selected and their influence on stock return of listed companies in the Tehran Stock Exchange are examined.
This research considers four hypotheses. In these hypotheses earnings quality, accruals, discretionary and nondiscretionary accruals are considered as independent variables and stock return as dependent variable. The examination of the research hypotheses, with the help of regression analysis during the period of 1379-1383 (Iranian calendar year), shows that there is little influence between earnings quality and stock returns.
