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.
Mona Abednazari; Iraj Noravesh; Ebrahim Ebrahimi
Volume 10, Issue 39 , October 2013, , Pages 147-166
Abstract
Intrinsic value of a company depends on its financial and investment decisions. Companies with different investment opportunities are priced different in the market. The set of investment opportunities of companies are influenced by their current status in their life cycle.In this study, based on data ...
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Intrinsic value of a company depends on its financial and investment decisions. Companies with different investment opportunities are priced different in the market. The set of investment opportunities of companies are influenced by their current status in their life cycle.In this study, based on data from a sample of Tehran Stock Exchange listed companies during the period of 1385 to 1389, relationship between investment opportunities and earnings in according to corporate life cycle were examined.Results showed that there is a significant relationship between investment opportunities and earnings response coefficients. The results showed that the explanatory power of relationship between earnings and investment opportunities in companies differs with their life cycle stages. The companies that are in the growth phase of the life cycle, the relationship between earnings and investment opportunities is stronger than the companies that are in the recession phase of the life cycle.
