Farshid Kheirollahi; Farzad Eivani; Ehsan Mohebi
Abstract
Issues and problems associated with financial statements have raised ambiguities about the role and responsibilities of the board of directors as well as the audit committee in financial reporting. Accounting restatements indicates that the financial statements of the past periods are unlikely to be ...
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Issues and problems associated with financial statements have raised ambiguities about the role and responsibilities of the board of directors as well as the audit committee in financial reporting. Accounting restatements indicates that the financial statements of the past periods are unlikely to be presented in accordance with the generally accepted accounting principles. In addition, the Accounting Restatements may indicate weakness in the firm's internal control system. An efficient director labor market wills likely reward directors who have a reputation for effectiveness with additional board positions and associated benefits, and penalize the poor performers by loss of their positions and benefits. In the present study, the consequences of financial statements as a reporting failure for non-executive directors with an emphasis on the audit committee are examined. For this purpose, 43 listed firms were selected as the main sample and 43 listed firms as the control group during the years 2012 to 2016 from Tehran Stock Exchange. According to the results of the study, the financial restatements have not led to the imposition of labor market fines for outside director
Mohammad Ali Bagherpour Velashani; Hossein Etemadi; Mahdi Omidfar
Abstract
The purpose of this research is to examine the relationship between thecorporate governance characteristics and accounting restatements due torapid growth of restatements in the world as well as the Iranian capitalmarket. Researchers believe that restatement is a sign of low quality offinancial reporting ...
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The purpose of this research is to examine the relationship between thecorporate governance characteristics and accounting restatements due torapid growth of restatements in the world as well as the Iranian capitalmarket. Researchers believe that restatement is a sign of low quality offinancial reporting by the companies. For doing so, similar to prior studiesand by consideration of the Iranian context a set of different corporategovernance characteristics including power of CEO, CEO changes, blockholders, largest shareholder, auditor type, auditor industry specialization,auditor changes, and finally capital structure are considered. In addition, tocontrol the possible effects of other factors, which could potentially affectfirms'''' restatement decisions, 10 new variables were added to the model.These control variables include return on assets, sales growth, operating cashflow, liquidity ratio, prior year performance, equity financing, debtfinancing, firm size, year, and industry type. The final research sampleincludes 999 observations of the Tehran Stock Exchange (TSE) listedcompanies for the period 2004-2009. The results indicate that CEO changes,auditor changes, auditor industry specialization, auditor size and largestshareholder as well as some financial characteristics such as operating cashflows ratio, liquidity ratio, and firm size are associated with the restatementsof the accounting income. Therefore, the findings support the hypothesis thatcorporate governance mechanisms can improve the quality of financialreporting.
