Financial Accounting
Mohsen Imeni; Seyyed Mohammad Moshashaei
Abstract
The two approaches are more prominent in the accounting literature, accrual-based earnings management and manipulating the actual activities however, the present study is considered the third type of earnings management model, namely a classification shifting. The purpose of this study is to investigate ...
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The two approaches are more prominent in the accounting literature, accrual-based earnings management and manipulating the actual activities however, the present study is considered the third type of earnings management model, namely a classification shifting. The purpose of this study is to investigate the effect of constraints on earnings management strategies on the application of shifting strategy in earnings classification in the Iranian capital market. The research sample consisted of 114 firms from 2013 to 2021 (1026 observation). Logistic regression models have been used to test research hypothesis. The results of the study show that financial health, institutional shareholders, audit firm size and market share have a negative and significant effect on the classification shifting. Also, the operating cycle has a positive and significant effect on the c classification shifting; and its tenure does not have a significant effect on the classification shifting. Additional tests indicated large companies have a greater incentive to do classification shifting (a form of earnings management) compared to small companies, because they have greater political costs.
Accounting and various aspects of finance
Erfan Mohammadi; hamideh Esnaashari
Abstract
The risk of stock price crash is one of the topics of interest in capital market research. Since the main mission of capital market regulators is to protect the rights of investors, it has always been important to consider the factors that affect crash risk. The quality of financial reporting and earnings ...
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The risk of stock price crash is one of the topics of interest in capital market research. Since the main mission of capital market regulators is to protect the rights of investors, it has always been important to consider the factors that affect crash risk. The quality of financial reporting and earnings management patterns are the most important tools available to regulators that can help them manage crash risk aversion, which is why this study addressed them. Earning management patterns include earnings management through accruals and real earnings management. The statistical population of this study is the companies listed on the Tehran Stock Exchange and the research sample was selected in terms of some features (including 167 companies) for the period 2012 to 2018. The research method of the present study is descriptive- correlation and the research hypotheses are tested using the generalized least squares method. The results show that the accrued earnings management model is related to stock crash risk and the use of earnings management through accruals increases the risk of stock price falls. While this is not the case with earnings management through real activities, the application of this earnings management model has nothing to do with the negative changes in stock returns. In addition, audit quality weakens the relationship between accrued earnings management pattern and stock crash risk. While the relationship between real earnings management pattern and stock crash risk is not affected by audit quality
Nezamoddin Rahimian; seyedjavad mirabbasi; Atena Khazen
Abstract
In recent years, some managers have been smoothing income with real activities and accrual items in companies. They have been effecting on reported profits by utilization of earnings management instruments. Financial distress and bankruptcy are significant issues in the economics and accounting literature. ...
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In recent years, some managers have been smoothing income with real activities and accrual items in companies. They have been effecting on reported profits by utilization of earnings management instruments. Financial distress and bankruptcy are significant issues in the economics and accounting literature. Bankruptcy is happened when the firms cannot settle their debts, and bankruptcy prediction models try to prevent it. This study shows the effect of real earnings management on bankruptcy prediction models. Therefore, abnormal production costs, abnormal discretionary expenses and abnormal operational cash flow are considered as a real earnings management methods. Also modified Altman model is used as criteria for bankruptcy of the firms. The sample of this study is consisted of 202 listed firms in Tehran Stock Exchange during 2009-2016. The hypothesis of this study has been examined by Multivariate Regression Model. The results showed that there is a significant relation between abnormal production costs and abnormal operational cash flows with bankruptcy prediction modelexcess stock returns.
Hassan Zalaghi; Asyieh Ghadami Mashhour
Abstract
Transparency is the core of financial reporting and the transparency of financial reporting is to provide an understanding of the economic facts of business units through financial reports. On the other hand, earnings management is an unrealistic report of a business's economic performance ...
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Transparency is the core of financial reporting and the transparency of financial reporting is to provide an understanding of the economic facts of business units through financial reports. On the other hand, earnings management is an unrealistic report of a business's economic performance that is aimed at misleading somestakeholders or affecting contractual outcomes. Therefore, in the current research, the relationship between real earning management and Accrual Earnings Management with the transparency of accounting information has been studied. The sample includes 112 Firms from listed Firms in Tehran Stock Exchange, which weresurveyed during 2010-2017. To measure real earning management used from model of Roychowdhury (2006) and for measuring the Accrual Earnings Management used from the modified Jones model and to measure the transparency of accounting information used from model of Bart et al.(2009). The results showed that there is meaningful relationship between real earning management and the transparency ofaccounting information, which means that the use of discretion regarding operational, investment and financing decisions, which are important indicators of real earning management, can affect the transparency of financial information.Too results showed that there was no significant relationship between Accrual EarningsManagement and transparency of accounting information.
Mahmoud Lari Dashtbayaz; Mohammad Javad Saei; Arash Ghorbani
Abstract
In this study, using a sample consisting of 2702 firm-year observations of firms listed in Tehran Stock Exchange, which their data were obtained for a period of 11 years from 1382 to 1392, we investigate whether firms with small pre-managed negative earnings, manage their income through real earnings ...
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In this study, using a sample consisting of 2702 firm-year observations of firms listed in Tehran Stock Exchange, which their data were obtained for a period of 11 years from 1382 to 1392, we investigate whether firms with small pre-managed negative earnings, manage their income through real earnings manipulation to avoid losses or not. The implication of behavioral studies suggests zero earnings threshold might function as an important psychological reference for which managers have strong incentive to beat or exceed it and they are likely to engage in activities like offering customers price discounts to temporally increase sales, overproduction to lower cost of goods sold and decreasing discretionary expenditures to improve earnings reported to stakeholders. Our initial findings documented a significant discontinuity and irregularity in the pooled cross-sectional empirical distributions of earnings scaled by the total assets in intervals close to zero. Despite the evidence was consistent with earnings management explanation, other statistical findings did not provide evidence and support the prediction that managers boosted their income through activities like unusual sales discounts, overproduction, and cutting discretionary expenses to meet the earnings threshold
Yadollah Tarivardi; Salahoddin Ghaderi
Abstract
Audit Committee is a key element of corporate governance. The knowledge and understanding of experienced Audit Committee members increase the Company's financial reporting and auditing value. The objective of this study is to investigate the impact of audit committee financial expertise on managerial ...
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Audit Committee is a key element of corporate governance. The knowledge and understanding of experienced Audit Committee members increase the Company's financial reporting and auditing value. The objective of this study is to investigate the impact of audit committee financial expertise on managerial short-termism in Tehran Stock Exchange listed companies. To measure managerial short-termism, we used three criteria: discretionary accruals and the actual items (through manipulation of sales and a reduction in discretionary spending). Tehran stock exchange listed firms constitute statistical population of the research. The sample consists of companies that had been listed on Tehran Stock Exchange before 2012 and have audit committee in the years 2013 to 2016. Financial expertise of audit committee members had no significant effect on earnings management on the basis of accruals. The investigation of the effect of audit committee financial expertise on real earnings management revealed that audit committee financial expertise has a negative effect on the real earnings management through manipulation the sales and reducing discretionary spending. These findings are useful for policy makers to formulate useful obligations regarding the Charter of the Audit Committee and the necessity of applying the principles of corporate governance and preparing voluntary corporate governance report.
Abstract
Audit Committee is a key element of corporate governance. Understanding and knowledge of experienced members of the Audit Committee increase the Company's financial reporting and auditing. The objective of this study is the investigation impact of audit committee financial expert on managerial short-termism ...
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Audit Committee is a key element of corporate governance. Understanding and knowledge of experienced members of the Audit Committee increase the Company's financial reporting and auditing. The objective of this study is the investigation impact of audit committee financial expert on managerial short-termism in companies listed on the Tehran Stock Exchange. To measure managerial short-termism were used three criteria discretionary accruals and the actual items (through manipulation of sales and a reduction in discretionary spending). Tehran stock exchange listed firms constitute statistical population of the research. The sample consisted of companies that have stock before 2012 and has a member of the audit committee in the years 2013 to 2016. Financial expertise of audit committee members had no significant effect on earnings management on the basis of accruals. The investigation audit committee financial expert effect on real earnings management revealed that members of an audit committee financial expertise on the real earnings management through manipulation the sales and reducing discretionary spending is negative effects. These findings are useful for policy makers to formulate and exchange of useful obligation to respect the Charter of the Audit Committee and the necessity of applying the principles of corporate governance and and prepared to have voluntary corporate governance report.
B Mashayekhi; A. H. Hosseinpour
Abstract
AbstractMost of earnings management researches in Iran focus on abnormal accruals. Whereas accruals and real activities result in earnings management, which are complementary (Sanjaya and Saragih, 2012). According to various studies, accruals eventually lead to fraud (Jones et al, 2008). So far no research ...
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AbstractMost of earnings management researches in Iran focus on abnormal accruals. Whereas accruals and real activities result in earnings management, which are complementary (Sanjaya and Saragih, 2012). According to various studies, accruals eventually lead to fraud (Jones et al, 2008). So far no research studied the relationship between accrual earnings management and real earnings management in companies suspected to fraud. So, in this study, the relationship between accrual earnings management and real Earnings management in companies suspected to fraud are discussed. In this analysis, panel data is used. For hypothesis testing, the data of 107 listed companies on Tehran Stock Exchange, which are suspected to fraud, for the period of 1392- 1387 (Solar Calendar), has been used. Results of the analysis indicate that real earnings management on accrual earnings management in companies suspected to fraud, at 95 percent confidence level, have negative and significant correlation. As a result, researchers, standard settings and auditors should pay attention to both real earnings management and accrual earnings management in fraud suspected companies. Audit quality should also be strengthened in the Iranian suspected of fraud listed companies
Hossien Fakhari; Javad Mohammadi; Mohsen Hasannataj Kordi
Abstract
The novelty and mandatory rules about establishing of the auditcommittee in Iranian listed companies as one of the important part ofcorporate governance are controversial subject. It has been importantespecially when the real earnings management is involved. It is due to thepossibility of the detection ...
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The novelty and mandatory rules about establishing of the auditcommittee in Iranian listed companies as one of the important part ofcorporate governance are controversial subject. It has been importantespecially when the real earnings management is involved. It is due to thepossibility of the detection of real earning management that is low incomparison with accrual earning management. In companies this researchintend to investigate about audit committee characteristic and real earningmanagement in Iranian listed companies. So we gather data about 112 listedcompanies of TSE during 1392 year and analysis them with cross-sectionalregression.In general our findings show that there is a significant relationshipbetween audit committee characteristics and real earnings management. Alsoour findings help to TSE policy maker for reporting and enforcement ofaudit committee charter. It indicates also that there is a vital need forapplying of corporate governance rules in Iranian listed companies
Gh. Karami; A. Tahriri; A. Davarinejad
Volume 8, Issue 31 , October 2010, , Pages 61-77
Abstract
The purpose of this paper is to investigate a relation between real earnings management and accounting earnings management to smooth earnings and to survey this fact when managers smooth earnings by real activities manipulation and when by discretionary accruals manipulation. On this paper is focus on ...
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The purpose of this paper is to investigate a relation between real earnings management and accounting earnings management to smooth earnings and to survey this fact when managers smooth earnings by real activities manipulation and when by discretionary accruals manipulation. On this paper is focus on discretional cash flow from operations as proxy variable of real earnings management and discretional accruals as proxy variable of accounting earnings management. Our statistical population is the firms listed in Tehran Stock Exchange that examined for the time period 1381 to 1386 by 98 firms as the sample.
As a result, we find evidences that show that managers use both real earning management and accounting earnings management to smooth earnings and relation between real and accounting earnings management is Simultaneous and managers use complementarily the two earnings management to smooth income.
