Accounting and various aspects of finance
Seyyed Hossein Noorhosseini Niyaki; Mehdi Meshki Miavaghi; Soghra Barari Nokashti
Abstract
This study was conducted with the aim of evaluating factors related to agency theory, shortcomings of government, consequences of critical theory maturity and the quality of social benefits in Management Accounting. The Foundation's data theory method was used to present a model regarding the maturity ...
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This study was conducted with the aim of evaluating factors related to agency theory, shortcomings of government, consequences of critical theory maturity and the quality of social benefits in Management Accounting. The Foundation's data theory method was used to present a model regarding the maturity of critical accounting and the quality of social importance, emphasizing the role of representation theory through interviews with 33 experts. The after of screening factors was used from fuzzy Delphi method for prioritization. The results showed that among the representation of government shortcomings and agency issues, the indicators related to the shortcomings of the government and representation issues are in the first and second places with the values of (0.915) and (0.908), respectively. Among the consequential factors, the factors related to information benefits, accounting system benefits, and social benefits are in the first to third place with the values of (0.932), (0.931), and (0.860), respectively.
Accounting and various aspects of finance
Saman Mohammadi; Hanieh Jaberi
Abstract
The rapid development of the business world has created numerous job opportunities for the workforce. People usually choose a job they are interested in and have the necessary ability to perform. Accounting graduates are one of the people who can enter the job market, and in the same way, accounting ...
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The rapid development of the business world has created numerous job opportunities for the workforce. People usually choose a job they are interested in and have the necessary ability to perform. Accounting graduates are one of the people who can enter the job market, and in the same way, accounting is an important profession in the business world. A person with an accounting background can pursue various careers, including government accounting, management accounting, financial accounting and accounting education. The current research investigates the effect of financial rewards, labor market considerations, personality, social values, and professional training on choosing a job as a government accountant. The data of this research was collected through a questionnaire that was distributed among 384 students of different levels of accounting, also partial least squares method was used to analyze the data. The results showed that financial rewards, labor market considerations, personality, social values, and professional training have a positive and significant effect on choosing a job as a government accountant.
Capital Structure
Hassan Zalaghi; Maryam Zalaghi
Abstract
Working capital management increases performance and reduces risk, thereby lowering the cost of capital. Many studies have been conducted in the field of working capital, including the adjustment of working capital toward targets and the effects of various variables on it. However, the influence of the ...
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Working capital management increases performance and reduces risk, thereby lowering the cost of capital. Many studies have been conducted in the field of working capital, including the adjustment of working capital toward targets and the effects of various variables on it. However, the influence of the prevailing economic environment, including booms and recessions, on the speed of adjustment has received less attention. The purpose of this research is to investigate the effect of economic booms and recessions on the speed of working capital adjustment in firms listed on the Tehran Stock Exchange. For this purpose, data from 153 firms listed on the Tehran Stock Exchange during the period of 2011 to 2022 were used. This research is practical in terms of purpose. The research method is based on the use of panel data and is quantitative and correlational. To analyze the data and test the research hypotheses, the dynamic panel method with the System Generalized Method of Moments (GMM) was used. The research results showed that managers adjust the firm's working capital ratio toward the target working capital. Other findings indicated that the rate of working capital adjustments during economic booms is greater than during recessions in both the financial and real sectors of the economy. IntroductionPeriods of prosperity increase a company's sales and growth, leading to more financing through internal financial resources and working capital. On the other hand, maintaining a larger amount of current assets may negatively affect the company's liquidity management and profitability, potentially reducing the return on assets. Additionaly, during economic recessions, financing through internal financial sources becomes limited, and financing through other sources increases the cost of capital. Accordingly, investing more or less than the optimal amount in working capital may negatively impact the company's performance. Therefore, based on the balance theory, firms may have a target working capital level that balances its benefits and risks (Ahangar, 2020). Nevertheless, firms adjust their working capital levels only when the benefits of the adjustment outweigh its costs (Ahangar, 2020).Greater attention to working capital management is valuable for firms, as it increases performance and reduces risk, which in turn will reduce the cost of capital (Aktas et al., 2015). Business units may deviate from the optimal level of capital turnover due to advances in technology, changes in production costs, or random shocks. However, because optimal working capital offers advantages for business units, they continually strive to bring the actual level of working capital closer to the optimal level. The speed at which firms correct the deviation between the actual level and the optimal level of working capital is called the speed of working capital adjustment (Ahangar, 2020).In domestic research, working capital has not been adequately explored as a dynamic concept, and many questions in this area remain unanswered for Iranian firms. For this reason, this research intends to investigate the existence of optimal working capital in Iranian firms using dynamic models and to measure their speed in achieving optimal working capital. Additionally, given the impact of economic booms and recessions on the provision of financial resources, especially working capital, and the need to adjust working capital toward optimal levels to increase firm value, this research examines the effect of economic booms and recessions on the speed of working capital adjustment in Iranian firms. Literature ReviewFirms that do not face restrictions on financing through external financial sources can more easily change the cash conversion cycle and, in fact, their working capital ratio. They can adjust working capital more quickly and reach the target working capital ratio faster. This means that during periods of economic prosperity, financing company expenses becomes easier, reducing adjustment costs such as financing costs. According to the balance theory, the speed of working capital adjustment increases or decreases depending on these factors (Ahangar, 2020).In the literature related to capital turnover, several theories of capital structure, including balance theory (Miller, 1977) and hierarchical theory (Myers, 1984; Myers & Majluf, 1984) have been used to study the behavior of capital turnover. The equilibrium theory states that there is a balance point between the benefits and risks of investment, at which maximum value is obtained for firms. According to this theory, any deviation from the target turnover level is quickly adjusted (Ahangar, 2020). In the static balance theory, movement toward the target ratio is assumed to be instantaneous, while in dynamic balance theory, the path to the target ratio is a gradual process (Orlova & Rao, 2018). According to the hierarchical theory, firms, regardless of their target working capital, provide financial support according to a predetermined hierarchy. This financing can come from internal or external funds. Furthermore, in this theory, firms prefer internal funds to external financial sources to reduce the costs associated with information asymmetry when financing investment projects (Myers, 1984). In research related to working capital, the balance theory has attracted more attention (Aflatooni et al., 1401). The research hypotheses are presented as follows:H1: Managers adjust the company's turnover ratio toward the target turnover.H 2: During periods of prosperity, the speed of working capital adjustment in firms is higher than during recessions in the financial sector of the economy.H 3: During periods of prosperity, the speed of working capital adjustment in firms is higher than during recessions in the real sector of the economy. MethodologyThis research is practical, analytical, quasi-experimental, correlational in terms of research purpose, and retrospective and post-event in terms of the time dimension of the data. To collect financial and accounting data, the Rahvard Novin database and reports published on the Codal website were used, and Eviews software was employed to analyze the data. To estimate the research models, the Blundell & Bond (1998) system generalized method of moments estimator was used. The statistical population of this research consists of firms listed on the Tehran Stock Exchange. ResultsThe results of the research show that managers adjust the company's working capital ratio to align with the target working capital. Additionally, the research findings indicate that the speed of working capital adjustment during periods of prosperity is higher than during periods of recession in both the financial sector and the real sector of the economy. DiscussionThe results of the first hypothesis test showed that company managers tend to adjust the company's capital turnover according to their goals, whether they are in a period of prosperity or recession. This finding is consistent with the results of Banos et al. (2020), Ahangar (2020), and Aflatooni et al. (1400). This suggests that Iranian firms, by moving toward the goal of capital turnover, attempt to manage the impact of prevailing economic conditions to avoid the risk of bankruptcy during recessions and the decrease in profitability caused by the uncontrolled and unmanaged increase in current assets during boom periods. The results of the second and third hypothesis tests indicate that the speed of capital turnover adjustment during economic prosperity is higher than during economic recession in both the financial sector and the real sector of the economy. These findings are consistent with the results of Helfin et al. (2018) and Aflatooni et al. (1401). According to the results of this research, it can be concluded that firms have a greater ability to adjust their working capital during economic booms in both the financial and the real sectors. This plays an important role in the financial management of firms under different economic conditions. These results can assist financial managers in determining appropriate strategies for managing capital turnover in any economic period. Additionally, these findings can help financial and economic researchers gain a better understanding of how different economic conditions affect the financial behavior of firms. ConclusionThese results can help financial managers determine appropriate strategies for managing capital turnover in any economic period. Additionally, these findings can help financial and economic researchers gain a better understanding of how different economic conditions affect the financial behavior of firms. Based on the findings of this research, the following practical suggestions are provided: Investors and company managers should always keep in mind that economic prosperity cannot be sustained without optimal capital management. It is merely a factor that increases the value of firms, or, in the case of economic recession, it may lead firms toward bankruptcy. Therefore, they should consider the effects of deviations in working capital when making decisions. Investors and managers should pay particular attention to the speed of working capital adjustment during economic booms (both in the financial and real sectors) due to the growth in the company and the simultaneous increase in current assets. The necessity of optimal liquidity and working capital management is crucial, as creating a balance in these areas will lead to improved performance and increased value for firms.
Accounting report
Morteza Adlzadeh
Abstract
The complexities and continuous changes in the business environment have raised significant doubts about the ability of corporate reporting systems to meet stakeholders' needs. Additionally, the unique characteristics of Iran's economic environment necessitate careful consideration of the forces shaping ...
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The complexities and continuous changes in the business environment have raised significant doubts about the ability of corporate reporting systems to meet stakeholders' needs. Additionally, the unique characteristics of Iran's economic environment necessitate careful consideration of the forces shaping the future of corporate reporting and appropriate policymaking by stakeholders. This research evaluates the policy options using a mixed-method approach, employing scenario analysis for corporate reporting in Iran. In the first stage, semi-structured interviews with experts and a fuzzy Delphi survey were conducted to identify the drivers affecting the future of corporate reporting in Iran. Next, using the Schwartz model, the importance and uncertainty of the key drivers were determined. The findings revealed that the three most critical and uncertain drivers are "increasing the connection with the global economy," "privatization of property," and "credit-oriented financial system". In the final stage, corporate reporting issues were categorized into five groups, and ten action options were developed. Robust planning analysis indicated that the optimal policy option includes expanding the target audience, prioritizing public interests, recognizing intangible assets, moving toward international standards, and advancing non-financial reporting with updated requirements. The results of this research offer valuable applications and recommendations for policymakers and stakeholders in corporate reporting. IntroductionCorporate reporting plays an essential role in the effective functioning of the global economy and significantly contributes to shaping our understanding of the current and future drivers of value creation in business and the financial sector. It is constantly evolving to meet the demands of a diverse and expanding range of users, with ongoing efforts to adapt reporting procedures to the continuous changes in the regulatory and business environment. Policymakers and various stakeholders in corporate reporting must develop innovative approaches for forecasting and policymaking, considering future developments in the field. In this context, there is a growing demand for increased transparency and improved reporting mechanisms. Consequently, professional and academic authorities, standard-setting organizations, regulatory bodies, and other interested parties have begun conducting studies, proposing solutions, and establishing requirements to improve the corporate reporting system. Legislative institutions and standard-setting organizations have consistently aimed to provide standards and recommendations through an evolutionary process to enhance reporting and address the information needs of investors in resource allocation. Thus, The formulation of appropriate policies to accommodate changes in the corporate reporting system is critical. Corporate reporting requires well-informed decisions by policymakers to address these challenges. Based on this need, the main research questions of this study are as follows:What are the main scenarios for the possible future of corporate reporting in Iran's economic environment?According to different scenarios, what should be the appropriate policies for corporate reporting stakeholders?MethodologyThis study is applied research, employing a mixed methodology to achieve its objectives. Semi-structured interviews were conducted following the approach outlined by Kvale and Brinkman (2009) to identify the driving forces shaping the future of corporate reporting. Thematic analysis was used to analyze the interview data. For the qualitative analysis, appropriate methods aligned with Creswell (2008) approach were employed. In the second step, fuzzy Delphi analysis was conducted to reach a consensus on the identified drivers. Subsequently, to assess the level of importance and uncertainty, a questionnaire containing the list of consensus drivers was distributed to the experts who participated in the earlier stages of the research. The expert panel method was used to identify policy issues in corporate reporting, and corresponding action options were developed for each issue. The evaluation of these policy options was then carried out using a questionnaire tool based on expert opinions. The results from the questionnaire analysis were processed using MATLAB software, incorporating the development of a fuzzy inference system.ResultsDuring the exploratory interview phase with experts, 37 effective drivers of corporate reporting were identified. After two stages of fuzzy Delphi implementation, a total of 18 drivers were approved and agreed upon by the experts. These agreed-on drivers served as the foundation for developing scenarios based on the Schwartz model (1991). Among these, three drivers of "entering the global economic arena with the removal of sanctions," "privatization of ownership," and "changing the collateral-based financing system to a credit-based system" were identified as having both high importance and high uncertainty, making them the primary basis for developing distinct corporate reporting scenarios. Considering that three drivers are the basis for designing the scenarios. Given that each of these three drivers can exist in two possible states, a total of eight scenarios were designed. Five main corporate reporting challenges were identified to evaluate policy options, and ten action options were developed. Finally, based on the analysis of policy option evaluation using robust planning criteria, the best policy option was determined.ConclusionThe evaluation of different scenarios indicates that scenario number 1, characterized by increased linkage with the global economy, privatization of ownership, and credit-oriented financing, is a favorable scenario for corporate reporting. In this scenario, there is a more suitable platform, greater demand, and an improved environment for the development and advancement of corporate reporting. However, it is important to note that this scenario also raises expectations for corporate reporting. If these expectations are not adequately addressed, stakeholders may increasingly rely on alternative information mechanisms. Based on the analysis of policy options evaluated using robust planning criteria, the best policy option was identified. This option includes expanding the target audience group, prioritizing public interests, increasing recognition of intangible assets, adopting international standards, and advancing non-financial reporting types with new requirements. This policy option demonstrates appropriate and acceptable performance across different scenarios, making it the most suitable choice for corporate reporting.
Profitability
Hanie Hekmat; Vahid Heydarzadeh khalife khandi; Razieh Ghorbani
Abstract
The purpose of this research is to investigate the moderating role of conservatism in the relationship between audit quality and earnings management. The current research is analytical and correlational. Furthermore, this study is considered quantitative based on the nature and characteristics of the ...
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The purpose of this research is to investigate the moderating role of conservatism in the relationship between audit quality and earnings management. The current research is analytical and correlational. Furthermore, this study is considered quantitative based on the nature and characteristics of the data used to analyze the hypotheses. Data collection involved first using the library method, followed by statistics provided by the Tehran Stock Exchange Organization. The findings obtained from the regression model, based on a sample of 110 companies listed on the Tehran Stock Exchange over an 8-year period from 2015 to 2022, indicate that audit quality has an inverse and significant relationship with earnings management. Additionally, it was found that conservatism influences the relationship between audit quality and earnings management. The results concluded that conservatism reduces earnings management by recognizing losses promptly and delaying the recognition of profits. Since audit quality reduces information asymmetry, it limits profit manipulation through earnings management. In this context, conservatism plays a vital role in restricting managers' opportunistic reporting. Also, conservatism diminishes the company's incentives for earnings management, thereby reducing biases caused by managerial opportunism in accounting. Consequently, conservatism is expected to have a moderating role in the relationship between audit quality and earnings management, and the findings of this research confirm these expectations.IntroductionThe objective of this research is to investigate the moderating role of accounting conservatism in the relationship between audit quality and earnings management. In today's capital markets, earnings management has become a critical concern. It is a tool used by company management to influence earnings so that the numbers reach a predetermined target. This approach is employed for various reasons, one of which is earnings smoothing. As a result, instead of experiencing years of abnormally high or negative earnings, companies aim to maintain relatively stable results by employing innovative accounting tactics (Ismail et al., 2022). The main objective of financial statement auditing is to assure users that the financial statements are prepared in accordance with International Financial Reporting Standards (IFRS). According to IFRS, financial reporting must provide truthful information, ensuring that financial statements accurately present the information they claim to provide. It is therefore logical that audit quality has an inverse relationship with the occurrence of earnings manipulation (Ismail et al., 2022). There is also substantial research suggesting that the level of accounting conservatism may reduce the practice of earnings management (Chen et al., 2007; Ball et al., 2000; Khan & Watts, 2009; Aminu & Hassan, 2018; Li et al., 2018). Chen et al. (2007) argued for the existence of a trade-off in conservative practice. Adopting the principle of conservatism may lead to more noise in accounting reports, potentially reducing the value of the stewardship role. On the other hand, this principle may decrease the practice of earnings management. However, Chen et al., (2007) asserted that under reasonable conditions, the reduction in earnings management is sufficient to compensate for the noise caused by excessive accounting conservatism. Legislators, standard setters, and academics have expressed concern that companies use conservative accounting coverage to manage earnings (AICPA, 1939; Devine, 1963; FASB, 1980; Levitt, 1998; Penman, 2001). A significant number of previous studies link the effects of earnings management to audit quality issues (Chowdhury & Eliwa, 2021). The importance of this research lies in its effort to fill the gap in understanding the moderating role of accounting conservatism in the relationship between audit quality and earnings management. MethodologyResearch Type: Based on its objective, this research falls under the category of applied research. Applied research uses the theories, principles, and techniques developed in basic research to address practical, real-world problems. In terms of methodology and nature, this research is a correlational study. Additionally, it is considered descriptive research, as the researcher does not intervene in the position, state, or role of the variables. The research method is inductive.Data Collection: Data collection will be conducted in two stages. In the first stage, a literature review will be performed using library resources and specialized Persian and English texts to establish the theoretical and conceptual framework of the research. In the second stage, financial data for the research will be extracted from the financial statements of companies listed on the Tehran Stock Exchange.Data Analysis: Eviews software will be used to analyze the collected data.Population and Sample: The population of this study includes all companies listed on the Tehran Stock Exchange between 2015 and 2022 (eight years). After applying the necessary limitations, the sample size for this research will consist of 110 companies listed on the Tehran Stock Exchange, representing 880 company-years. It is important to note that only listed companies are included in the study. ResultHypothesis 1: To test the first hypothesis of the study, Model (1) was used. The results of the model estimation show that the coefficient of audit quality (0.3645) is significant at the 5% level, indicating a significant inverse relationship between audit quality and earnings management. Among the control variables, firm size, sales growth, and research and development expenses exhibit a positive and significant relationship with earnings management, while financial leverage shows a negative and significant relationship. Additionally, it was found that book value, operating expenses, and sales volatility do not have a significant relationship with earnings management. The variance inflation factor values confirm the absence of multicollinearity among the explanatory variables. The significance of the F-statistic (3674.6) at the 1% level demonstrates that the model is significant. The Durbin-Watson statistic (2.0803) indicates no autocorrelation problem in the model components. Furthermore, the coefficient of determination shows that the independent variable explains approximately 53% of the variation in total. Based on these results, the first hypothesis of the study is not rejected at the 5% confidence level.Hypothesis 2: To test the second hypothesis of the study, Model (2) was used. The results show that the coefficient of the audit quality variable (0.6577) is significant at the 5% level, indicating a significant inverse relationship between audit quality and earnings management. The coefficient of the conservatism variable (0.7305), significant at the 10% level, reveals a significant inverse relationship between conservatism and earnings management. Finally, the combined coefficient of determination for audit quality and conservatism (0.5913) is significant at the 5% level, indicating that conservatism moderates the relationship between audit quality and earnings management. The variance inflation factor values confirm the absence of multicollinearity among the explanatory variables. The significance of the F-statistic (1893.6) at the 1% level demonstrates that the model is significant. The Durbin-Watson statistic (2.1972) indicates no autocorrelation problem in the model components. Furthermore, the coefficient of determination shows that the independent variable explains about 51% of the variation in total. Based on these results, the second hypothesis of the study is not rejected at the 5% confidence level. ConclusionThe results of the test for the first hypothesis indicate a significant inverse relationship between audit quality and corporate earnings management. Low audit quality occurs when audited financial statements contain errors that the auditor has not identified or disclosed in their report. Therefore, audit quality can be associated with the quality of financial reporting, as higher audit quality ensures higher reporting quality. The presence of audit quality reduces in information asymmetry, which in turn decreases earnings manipulation through earnings management. These results are consistent with the research of Hanoun et al. (2010), Alzoubi (2017), Fatahi Nafchi, and Fazel Dehkordi (2018), and Khajavi and Maimand (2015). The results of the test of the second hypothesis show that conservatism has a moderating effect on the relationship between audit quality and earnings management. Audit quality reduces information asymmetry, which subsequently decreases earnings manipulation through earnings management. In this context, conservatism plays an important role in restricting opportunistic reporting by managers. Furthermore, conservatism reduces a company's motivation for earnings management, thereby mitigating the biases caused by opportunism in accounting.
Accounting and various aspects of finance
Hamid Khodayari; Malektaj Maleki Oskuie; Azar Moslemi; Hasan Hemmati
Abstract
The purpose of this research is to explore perspectives on sustainability in strategic management accounting for the sustainability of companies in the context of financial technologies (FinTech). In terms of research method and based on its purpose and type of results, this study is classified as exploratory ...
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The purpose of this research is to explore perspectives on sustainability in strategic management accounting for the sustainability of companies in the context of financial technologies (FinTech). In terms of research method and based on its purpose and type of results, this study is classified as exploratory and developmental research. Initially, through thematic analysis, the accounting functions of strategic management for corporate sustainability in terms of financial technologies were identified. The reliability of the identified themes was then examined using Delphi analysis. Finally, through scenario analysis, the research aimed to establish strategic management accounting perspectives related to sustainability in financial technologies (FinTech). The results of the first phase of the research, conducted through 13 interviews revealed the identification of 3 overarching themes, 6 organizing themes, and 26 basic themes. IntroductionNeoclassical economists and numerous management theories emphasize the assumption that the primary goal of companies is to maximize shareholder interests under competitive market conditions and limited capacities for acquiring financial resources. Shareholders are regarded as the most critical providers of financial resources necessary to advance corporate goals. Consequently, companies must adopt various significant approaches to secure stable financial resources and maintain their position in competitive market environments. One such approach involves leveraging financial technologies, or fintech, which focus on investing in technological infrastructure to achieve longer-term goals. These strategies aim to influence competitive dynamics arising from economic decisions and address the side effects of the company's operations on other stakeholders. Fintechs are defined as financial operational structures that enhance the scope of services expected by stakeholders through the application of innovative technologies, such as blockchain. Literature ReviewWith the evolution of financial and accounting information technologies and infrastructures, management accounting is increasingly regarded as a dynamic phenomenon requiring reorganization in both cognitive and content dimensions. These changes, which began in 2008 with the emergence of fintech and artificial intelligence, have accelerated significantly in recent years. Fintech refers to innovative methods of financial transactions and reimbursement systems enabled by advancements in computer communication, big data analysis, networking, and artificial intelligence technology. The term fintech, an abbreviated of “financial technology” is often used in the context of financial strategies adopted by commercial businesses. Through fintech, businesses can develop capacities to deliver digital financial services using cutting-edge software and technologies. MethodologyBased on the objective classification in the methodology, this study is considered exploratory because it utilizes expert interviews to identify the driving criteria of strategic management accounting for the sustainability of companies using financial technologies. In terms of its results, the study is developmental, as the combination of phenomena investigated lacks theoretical coherence and an integrated content framework in the study’s context. In terms of data type, this study employs a mixed-method approach. In the qualitative phase, thematic analysis and expert interviews were used to identify the driving criteria of strategic management accounting for corporate sustainability in the context of financial technologies. Subsequently, a Delphi analysis was conducted to examine the reliability of the identified themes. In the quantitative phase, the study utilizes scenario analysis to determine the functional perspectives of strategic management accounting drivers for sustainability in companies using financial technologies. To achieve this, the study focuses on mutual matrix processes and pairwise comparisons of criteria in row "i" and column "j" to identify the most favorable strategic management accounting scenarios for sustainability in the context of financial technologies. ResultIn this study, due to the lack of a coherent theoretical framework regarding the accounting functions of strategic management in the sustainability of companies using financial technologies, thematic analysis was employed in the first phase. During the 13 interviews conducted, a total of 3 overarching themes, 6 organizing themes, and 26 basic themes were identified through three stages of coding. Next, to formulate future scenarios for assessing the sustainability of financial technologies, the link matrix was used to identify the most impactful central organizing themes by analyzing the inputs and outputs of the matrix model through the MiM-Mak matrix. The results of this phase confirmed two key bases: the service cycle costing technique in fintech sustainability and the benchmarking technique in fintech sustainability. These bases serve as the axes for determining possible scenarios for evaluating the functions of strategic management accounting in the sustainability of companies using financial technologies. Through the reciprocal matrix, these scenarios provide a structured approach to describing the phenomenon under investigation. DiscussionThe purpose of this study is to explore perspectives on strategic management accounting in the sustainability of companies in terms of applying financial technologies (FinTech). Based on the results, the most favorable scenarios, in the matrix of mathematical functions is located in the third quadrant, referred to as the "metaphorical scenario of Heraclitus". This scenario highlights the significant role of the service cycle costing technique in fintech sustainability. In analyzing the results, it can be concluded that strategic management accounting, with a focus on the service cycle costing technique in fintech sustainability, seeks to explore the benefits of providing technological financial services to beneficiaries. This approach differentiates itself from traditional methods of delivering financial services by offering more perceptible advantages, such as faster access to financial information, enhanced technical criteria for decision-making, and improved financial support for beneficiaries. Thus, the financial service cycle costing tool, through strategic management accounting, enables these capabilities and fosters more advanced prospects for fintech sustainability at the level of commercial companies. ConclusionThe results of this study indicate that strategic management accounting, with an emphasis on the service cycle costing technique in fintech sustainability, aims to explore the benefits of providing technological financial services to beneficiaries. This approach seeks to differentiate these services from other financial service delivery methods by offering more tangible advantages, such as faster access to financial information, enhanced technical criteria for decision-making, and improved financial support for beneficiaries.
Accounting report
Esmaeil Khoshbakht; Amirhossein Taebi naghandari
Abstract
The present study aims to investigate the effect of religious beliefs on the inaccuracy of accountants in preparing financial statements, with a focus on the mediating role of professional ethics in Iran. For this purpose, 400 questionnaires were designed and distributed among official accounting and ...
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The present study aims to investigate the effect of religious beliefs on the inaccuracy of accountants in preparing financial statements, with a focus on the mediating role of professional ethics in Iran. For this purpose, 400 questionnaires were designed and distributed among official accounting and auditing professionals. The data was analyzed using Amos software. The findings indicate that religious beliefs have a negative and significant effect on accountants’ dishonesty and a positive and significant effect on their professional ethics. Additionally, the professional ethics of accountants is a factor that reduces inaccuracies in preparing financial statements, exerting a negative and significant effect. Finally, as a mediating variable, professional ethics explains the relationship between religious beliefs and accountants' dishonesty. The findings confirm that professional ethics serves as a partial mediator in this relationship.IntroductionFraud and inaccuracies in financial reporting have drawn significant attention in the accounting and auditing professions, particularly regarding their causes and the methods available to prevent fraudulent behavior. The inaccuracy of accountants is a multi-dimensional and complex phenomenon with various causes and effects, often leading to destructive consequences for business units and society.Increasing levels of inaccuracy in financial reporting have resulted in the bankruptcy of both large and small companies, raising concerns about the quality of financial statements. Consequently, identifying opportunities and possibilities to address accountants' inaccuracies in financial statements has become a key focus for creditors, investors, consultants, legislators, accountants, and other stakeholders.The expansion of morality and religiosity can often be more effective than laws, regulations, and standards in preventing inaccuracies. Accountants and auditors primarily follow laws and standards imposed by regulatory bodies such as the standards development committee and the auditing organization. However, these externally imposed standards may not always be fully accepted or embraced wholeheartedly. In contrast, religious and moral principles such as honesty and truthfulness are deeply rooted in personal beliefs. These principles often stem from family upbringing and are influenced by factors such as schooling, religion, and public or cultural institutions, which are deeply intertwined with native and natural structures. As a result, there is a stronger likelihood that auditors and accountants will adhere to religious and moral principles compared to externally imposed standards.Literature ReviewThe relationship between religiosity and religious beliefs can be analyzed through the theory of social norms. Social norm theory suggests that social norms influence people's behavior. It predicts that the religious beliefs of managers are shaped by the religious norms prevalent in their local geographical area. The importance of social and religious norms within a society plays a significant role in fostering people's adherence to these norms. By emphasizing the overall importance of moral behavior, faith-based beliefs provide specific guidelines and equip adherents with a framework for describing and understanding moral or immoral experiences.MethodologyThis research is one of the few studies that utilize the scientific method of construction and experimental proof, conducted based on pre-determined research hypotheses and plans. This type of research is appropriate when the data measurement criteria are quantitative, and statistical techniques are employed to extract results. Additionally, since the data for this study is collected through a questionnaire, it can be classified as survey research. In terms of its purpose, it falls within the applied research category.In this study, all official accounting and auditing justice experts working at the provincial centers across the country were considered as the statistical population. Using Cochran's formula, the sample size for the study was determined to be 385 individuals. To ensure caution, 400 questionnaires were distributed among the members of the statistical population. Given the existing limitations, the questionnaire was administered online through the Judiciary Research Center. Out of the respondents, 325 individuals completed the questionnaire, and the number of valid responses suitable for analysis was 312. It should be noted that 13 questionnaires were excluded due to incomplete information. Therefore, the total number of questionnaires used for statistical analysis in this study was 312.ResultsFigure 1 illustrates the regression coefficients and the paths related to the testing of research hypotheses. The variable of faith-based beliefs is considered an independent variable, the inaccuracy of accountants in financial reporting is the dependent variable, and professional ethics is the mediating variable. Path c represents the relationship between the independent and dependent variables in the absence of a mediating variable. Path a shows the relationship between the independent variable and the mediator, while path b indicates the relationship between the mediator and dependent variables. Additionally, path c' represents the relationship between the independent and dependent variables in the presence of the mediating variable. To test the research hypotheses in Amos software, three mediation models, the direct model and the indirect model were employed. These models were included in the present study, and the related findings were reported. The findings revealed that religious beliefs have a negative and significant effect on accountants’ dishonesty and a positive and significant effect on their professional ethics. Furthermore, the professional ethics of accountants, similar to religious beliefs, is a factor that reduces the inaccuracy of accountants in preparing financial statements and has a negative and significant effect on it. Finally, as a mediating variable, professional ethics explains the relationship between religious beliefs and accountants' dishonesty. The findings confirm that professional ethics is a partial mediator in this relationship.DiscussionThis research demonstrated how religiosity and professional ethics can effectively reduce the inaccuracy of accountants in preparing financial statements. The beliefs of accountants and preparers of financial statements can often have a greater impact than reporting laws and standards. Since accountants’ dishonesty has highly destructive effects on society, economic stability, and public trust, the findings of the research suggest that strengthening accountants’ faith and moral beliefs can help prevent this harmful factor.ConclusionAt first glance, it might be expected that an accountant with strong religious principles would demonstrate higher moral standards, thereby preventing them from preparing reports and financial statements that deviate from accounting principles. However, this is not always the case, and in some instances, the result may be the opposite. In reality, if religious beliefs alone do not enhance the moral system, they cannot effectively mitigate fraudulent behavior. In such situations, religiosity without moral commitment may manifest as hypocritical behaviors, which not only fails to reduce wrongdoing, but may even exacerbate it. Without ethical commitment, managers and accountants may manipulate financial statements to make them appear favorable, altering the numbers to avoid managerial threats without adhering to ethical principles.
Accounting and various aspects of finance
Gharibe Esmailikia; Mahdis Naseri; Amin Ghanbari
Abstract
In today’s world, a company’s profile is not determined solely by financial issues; rather, there is a growing need to include environmental and social perspectives. Consequently, there has been a rapidly increasing awareness of social and environmental activities, which in recent years has ...
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In today’s world, a company’s profile is not determined solely by financial issues; rather, there is a growing need to include environmental and social perspectives. Consequently, there has been a rapidly increasing awareness of social and environmental activities, which in recent years has been considered under the concept of sustainability performance. According to the contingency theory, the implementation of a sustainability approach can vary significantly depending on an organization’s unique conditions. This theory has had significant implications for management decision-making, as management decisions are influenced by the characteristics of the managers themselves. The purpose of this research is to investigate the moderating role of managers' behavioral dimensions on the relationship between contingent factors and non-financial sustainability performance. Nine research hypotheses were tested and analyzed using the information of 142 firms admitted to the Tehran Stock Exchange during the period from 2013 to 2022 (including 1,420 firm-year observations) and using regression. The results indicated a positive and significant effect of firm size on non-financial sustainability performance and a negative and significant effect of environmental complexity and uncertainty on non-financial sustainability performance. No significant relationship was documented between board independence and non-financial sustainability performance. Management optimism strengthens the relationship between firm size and non-financial sustainability performance. In addition, management myopia changes and negates the relationship between board independence and non-financial sustainability performance. However, management optimism does not have a moderating role in the relationship between environmental complexity and uncertainty and the independence of the board of directors with non-financial sustainability performance. Finally, management myopia does not moderate the relationship between firm size, environmental complexity, and uncertainty with non-financial sustainability performance. IntroductionThe business environment for companies is increasingly uncertain and unstable due to many factors, not only financial but also non-financial. The application of contingency theory to sustainability reveals several factors that may influence performance and shape sustainability-oriented practices. In the field of corporate sustainability, this theory guides companies to prioritize sustainability as a dynamic capability to identify new opportunities and threats, leverage relevant opportunities, and adapt to market dynamics. Organizational strategic outcomes and processes are influenced by the managerial characteristics of senior managers. In particular, strategic choices are driven more by behavioral factors than by mechanical optimization. This theory emphasizes that the different characteristics of senior managers affect their strategic and structural decisions, which directly impact organizational performance. Based on this, the aim of the current research is to investigate the moderating role of managers' behavioral dimensions on the relationship between contingent factors and non-financial sustainability performance.MethodologyAccording to its nature, this research is classified as applied, descriptive, and based on regression analysis. The necessary information for the research variables and hypothesis testing was gathered by referring to audited financial statements, independent audit reports, and financial database software such as Rahvard Navin and Tadbir Pardaz. The research data was then compiled in Excel, and used for statistical analysis with EViews software.In this research, the statistical population includes all the companies listed on the Tehran Stock Exchange. Considering the conditions, a total of 142 companies (equivalent to 1,420 company-years) were selected, and their data was compiled using Excel software, then summarized, classified, and refined. Based on the objectives of the research, nine hypotheses were formulated as follows:First hypothesis: Firm size has a relationship with the company's non-financial sustainability performance.Second hypothesis: Environmental complexity and uncertainty are related to the company's non-financial sustainability performance.Third hypothesis: Board independence is related to the company's non-financial sustainability performance.Fourth hypothesis: Management optimism moderates the relationship between firm size and non-financial sustainability performanceFifth hypothesis: Management optimism moderates the relationship between environmental complexity and uncertainty with non-financial sustainability performance.Sixth hypothesis: Management optimism moderates the relationship between board independence and non-financial sustainability performance.Seventh hypothesis: Management myopia moderates the relationship between firm size and non-financial sustainability performance.Eighth hypothesis: Management myopia moderates the relationship between environmental complexity and uncertainty and non-financial sustainability performance.Ninth hypothesis: Management myopia moderates the relationship between board independence and non-financial sustainability performance. To test the above hypotheses, the following regression models are used:+(1) +(2)+(3)ConclusionThe increasing pressure to meet sustainability requirements has encouraged companies to implement sustainability programs to monitor and evaluate their processes and the impact of their activities along the value chain. It appears that not only is there a difference of opinion about the definition of corporate sustainability, but there is also ambiguity regarding the implementation of corporate sustainability practices. As a result, a significant diversity in organizations and various approaches to corporate sustainability can be identified. In this context, to enhance the understanding of the implementation of sustainable practices, it is suggested to adopt contingency theory. The aim of the current research is to investigate the role of managers' behavioral dimensions on the relationship between contingent factors and non-financial sustainability performance.The results of the first hypothesis test showed that firm size has a positive and significant effect on non-financial sustainability performance. Since firm size affects the company's strategy, organizational goals, and competitive environment, non-financial performance is also influenced by these factors. Therefore, the larger the firm, the better its sustainability performance. This finding is in line with the findings of Mousanejad et al. (2021) and Yaghoubian et al. (2021).The test of the second hypothesis indicates a negative and significant impact of environmental complexity and uncertainty on non-financial sustainability performance. Non-financial sustainability performance, which encompasses diverse aspects of the company's activities such as employees, the role of shareholders, supplier contracts, internal processes, and service quality, is relevant to health indicators. The presence and increase of environmental uncertainty negatively affect the quality of these factors, meaning that environmental uncertainty and complexity reduce non-financial sustainability performance. This result is consistent with the findings of Yuliusman et al. (2023) and contradicts the findings of Yaghoubian et al. (2021).In the third hypothesis, no significant relationship between board independence and non-financial sustainability performance was documented. This finding can be explained by the fact that several factors, including the specific characteristics of companies, can affect the relationship between board independence and non-financial sustainability. Therefore, no significant relationship between these two variables was found in the companies studied.In the fourth hypothesis, the moderating role of management optimism, as one of the behavioral dimensions of managers, was investigated in the relationship between firm size and non-financial sustainability performance. The findings indicate a positive effect of management optimism on this relationship. In other words, management optimism strengthens the relationship between firm size and non-financial sustainability performance.The fifth and sixth hypotheses examined the moderating role of management optimism on the relationship between complexity, environmental uncertainty, and board independence with non-financial sustainability performance. The findings showed that management optimism does not moderate the relationship between environmental uncertainty, company complexity, and board independence with non-financial sustainability performance.The moderating role of management myopia on the relationship between contingency variables and non-financial sustainability performance was investigated in the seventh to ninth hypotheses. The findings indicate that management myopia does not moderate the relationship between firm size, complexity, and environmental uncertainty with non-financial sustainability performance. However, regarding the relationship between board independence and non-financial sustainability performance, management myopia, as a moderating variable, has changed the direction of the relationship, resulting in a negative effect of board independence on non-financial sustainability performance. In other words, management myopia leads to reduced attention to non-financial sustainability performance under conditions of greater managerial independence, thereby degrading this performance.رابطه بین عوامل اقتضایی و عملکرد پایداری غیرمالی؛ نقش
Financial audit
Mohammad Amri Asrami; Seyed Kazem Ebrahimi; Hossein Amini
Abstract
Compliance with social and environmental responsibilities is one of the requirements of the current competitive era, and the competitive pressure on companies in this situation imposes costs that can affect financial performance. This research investigates the moderating role of competitive strength ...
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Compliance with social and environmental responsibilities is one of the requirements of the current competitive era, and the competitive pressure on companies in this situation imposes costs that can affect financial performance. This research investigates the moderating role of competitive strength in the relationship between social and environmental responsibilities and financial performance. The statistical sample for this research consists of companies listed on the Tehran Stock Exchange between 2016 and 2021. Using a regular screening method, 108 companies were selected as samples. After checking the classical assumptions of regression, the panel data model with fixed effects was used. The results showed that social performance has a positive relationship with financial performance. Competitive strength has a negative moderating effect on the relationship between social performance and financial performance. Environmental performance also has a positive relationship with financial performance, and competitive strength has a negative moderating role in this relationship. According to the coefficients of the variables, the social dimension of the company is more effective in increasing performance than the environmental dimension.
Introduction
A balance must be established between the modernization process and social and environmental concerns. Additionally, society's expectations regarding moral, legal, economic, and public interests require companies to commit to the communities in which they operate (Porter & Kramer, 2011). On the other hand, the growing interest of companies, especially large, national, and multinational companies, to demonstrate better environmental and social performance as part of their corporate social responsibility policy is often reflected in their management structures and investment policies. In line with the social responsibility policy, companies invest in the environmental field for three reasons: complying with environmental and social regulations and standards, improving company conditions, creating a favorable image of the company for society, and gaining access to other markets (Zaid et al., 2020).
Social responsibilities have been utilized in various businesses to achieve a competitive advantage and create stable relationships with society. In this regard, the theory of social responsibilities refers to the combined pursuit of economic progress, social equality, and environmental protection. The nature of social responsibilities is the interconnected and mutual realization of financial, social, and environmental goals (Donkor et al., 2023).
A company's environmental responsibility refers to its organizational behavior and commitment to the natural environment, which symbolizes the company's environmental ethics (Dilla et al., 2019). Several studies have shown conflicting results regarding a firm's environmental performance and financial performance. Some previous studies have shown that environmental responsibility improves long-term performance (Arda et al., 2019; Gilal et al., 2019). In addition, green knowledge and innovation promote an environmental orientation that allows companies to improve performance (Atan et al., 2018). On the contrary, since introducing environmental initiatives is costly (Zhang et al., 2019), evidence has shown that corporate environmental responsibility does not always lead to positive results (Chollet & Sandwidi, 2018). Based on a sample of companies listed on the Tehran Stock Exchange, this study examines the role of competitive strength in the relationship between firms’ social and environmental performance and financial performance.
Literature Review
Green theory emphasizes that community care helps organizations in sustainable development. Hence, government regulations and customer pressure encourage companies to adopt such practices in emerging markets. Environmental responsibility allows companies to improve their competitive advantages and dynamic capabilities (Arda et al., 2019). Incorporating environmental values supports environmental business in the long term (Gill et al., 2019). In general, green knowledge and innovation promote an environmental orientation and green resource management in companies, subsequently allowing them to improve their performance (Atan et al., 2018; Zhang et al., 2019). Based on this, this research expects to improve the effectiveness of a company by using organizational resources for environmental performance while simultaneously improving social performance.
Proponents of the positive effects of CSR argue that CSR enhances corporate value and image, as well as develops brand positioning, reputation, and corporate image, which in turn enhances financial performance in the long run (Hill, 2020). It is often assumed that the proper use of economic, social, and governance standards requires higher financial efficiency and performance.
Managers of firms with fewer resources have fewer opportunities to divert resources to their advantage (Kumar et al., 2023). They are more concerned about their presence in the market and maintaining their market share in the industry, and they consider themselves less socially responsible towards the company, market, and society (Jiang et al., 2019). The moderating power of competition encourages companies to act in socially responsible ways and helps maintain their reputation (Chih et al., 2010; Graafland, 2018). The intensity of competition affects decisions related to social responsibilities, including social and environmental performance (Jiang et al., 2019). Different levels of competition affect the relationship between the social and environmental performance of companies. Social practices and environmental ethics are intangible assets for a company in capital markets, and these assets change with shifts in competition levels. In particular, considering the role of competitive strength, the relationship between social performance and environmental performance with financial performance changes as the level of competition fluctuates (Saeed et al., 2023). Therefore, the following hypotheses can be proposed:
Hypothesis 1: There is a positive relationship between social performance and financial performance.
Hypothesis 2: Competitive strength moderates the relationship between social performance and financial performance.
Hypothesis 3: There is a positive relationship between environmental performance and financial performance.
Hypothesis 4: Competitive strength moderates the relationship between environmental performance and financial performance.
Methodology
This research is practical and post-event, conducted using the secondary data collection method. The information from companies was collected by referring to the Codal.ir website and using their financial statements and attached notes. The study period covers 2016 to 2021. Before testing the proposed model and hypotheses, the assumptions of the regression models were checked. The Chow test, Hausman test, and variance heterogeneity test indicated that the panel data model with fixed effects is suitable for the models of this research. In this study, the Breusch-Pagan-Godfrey test was used to check for heteroscedasticity. The results of the heteroscedasticity analysis show that the residuals of the normal regression models do not have constant variance, indicating heteroscedasticity, and the generalized least squares method was used to address this issue.
Results
The variable coefficient of social performance in models 1 and 2 is 0.0092 and 0.019, respectively, and is significant at the 99% confidence level in both models. There is a positive relationship between social performance and financial performance, meaning that compliance with social responsibilities leads to an increase in financial performance. However, in model 2, the moderating variable (strength of competition) reverses the relationship between social performance and financial performance. At the 99% confidence level, the strength of competition has a negative effect on the relationship between social performance and financial performance. The variable coefficient of environmental performance in models 3 and 4 is 0.003 and 0.004, respectively, and is significant at the 95% confidence level. There is a positive relationship between environmental performance and financial performance, indicating that compliance with environmental responsibilities leads to an increase in financial performance. In model 4, the sign of the coefficient for the moderating variable (strength of competition) is positive, meaning that the strength of competition has a positive relationship with financial performance. However, the moderating variable reverses the relationship between environmental performance and financial performance, so at the 99% confidence level, the strength of competition has a negative effect on the relationship between environmental performance and financial performance.
Conclusion
Disclosure of social performance leads to increased financial performance. The disclosure of social performance by the company, as a positive signal to the market and shareholders, directly benefits the improvement of the company’s reputation and value. Additionally, this disclosure can indirectly affect the company’s financial performance through mediators such as competitive advantage, reputation, customer satisfaction, access to capital, and environmental resource efficiency. The company's competitive advantages are one of the important dimensions of market characteristics that company leaders should consider in their efforts to make optimal decisions to maximize financial performance. When there are no competitive pressures, managers may become lax in their duties, leading to poor management and high agency costs.
Disclosure of environmental performance also leads to increased financial performance. Compliance with environmental responsibilities and publication of periodic reports raise awareness and judgment among society and stakeholders, thereby strengthening the company's brand. To ensure that environmental goals are met, environmental functions such as the development of environmental policies and programs, setting quantitative and measurable goals for reducing environmental pollution, implementing pollution prevention obligations, measuring and evaluating potential environmental effects, revising executive plans, and making reforms must be carried out.
Competitive strength has a negative moderating role in the relationship between environmental responsibilities and financial performance. Today, governments support and encourage companies to fulfill social and environmental responsibilities. On the other hand, when facing external pressures, companies rely on government support and try to attract technical and financial incentives to carry out social and environmental responsibilities at a lower cost and more easily. By actively implementing social and environmental responsibilities, companies can communicate with governing bodies and actively participate in the development and approval of environmental responsibility programs. These actions help companies gain external legitimacy and promote their corporate brand. In this way, by taking advantage of these factors, companies can increase profitability while raising product prices and consolidating customer loyalty. Additionally, emphasizing the reduction of physical waste through environmentally friendly solutions can lay the groundwork for reducing costs and increasing profitability.
Accounting tools
Mohsen Borzouzadeh Zavareh; Mohammad Reza Nikbakht
Abstract
This article aims to evaluate the performance of staff at the National Treasury following the implementation of an electronic fund request system. This evaluation is conducted using the Balanced Scorecard approach. The research methodology employed is descriptive and applied in nature. The study’s ...
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This article aims to evaluate the performance of staff at the National Treasury following the implementation of an electronic fund request system. This evaluation is conducted using the Balanced Scorecard approach. The research methodology employed is descriptive and applied in nature. The study’s statistical population comprises 53 experts, auditors, and managers from the National Treasury, working at the Ministry of Economic Affairs and Finance. This group also includes the implementers and specialists of the electronic fund request system. The validity of the questionnaires was determined using content validity, and reliability was established with a Cronbach’s alpha coefficient of 0.883. The study’s findings suggest that the performance of National Treasury staff, post-implementation of the electronic fund request system, is satisfactory when viewed through the lens of the Balanced Scorecard. The key criterion for evaluating the performance of National Treasury staff is empowerment, with an average rank of 3.25.
Introduction
Success in the implementation of electronic government in any country requires a model tailored to the goals, requirements, and conditions of that country. Therefore, a lack of proper planning can lead to neglecting needs and failure in achieving the goals. However, planning alone is not enough to guide and evaluate the performance of companies in an era where creating value and generating wealth through investment in customers, suppliers, employees, processes, technology, and innovation is essential.
Research question:
Is the performance of the employees of the General Treasury Department optimal from the perspectives of financial, customers, internal processes, and growth and learning dimensions of the Balanced Scorecard after the implementation of the electronic fund request system?
Literature review
The Balanced Scorecard presents a framework for articulating strategies aimed at generating value for an organization’s stakeholders, including shareholders, customers, and citizens. Over the years, the Balanced Scorecard has evolved significantly. It began as a performance evaluation tool in 1990, featuring performance dimensions, strategic objectives, key indicators, and performance-related rewards. By 1996, it had transformed into a new management system, emphasizing organizational learning, the identification of operational issues, feedback for future planning, and fostering organizational knowledge, along with the introduction of the PDCA management cycle. In 2001, it was presented as a framework for facilitating change.
Methodology
Drawing upon the models scrutinized in the research trajectory and theoretical underpinnings, this study evaluates employee performance within the country’s General Treasury. It employs the Balanced Scorecard approach and uses the Treasury as a case study to formulate the research model. This research is applied in nature, utilizing the cognitive and informational context provided by foundational research to address needs. The aim of applied research is to devise solutions for operational issues, and its results should be implementable. Furthermore, in terms of its nature and methodology, this research is descriptive (survey research). The objective of conducting descriptive research is to depict the tangible and actual characteristics of a subject or phenomenon. The questionnaire’s validity was confirmed by a group of university experts and professors, and its reliability was affirmed using Cronbach’s alpha coefficient (α=0.883). Following the distribution, collection, and analysis of information, a consensus was reached among experts to position the criteria within each of the four dimensions of the BSC.
Result
Upon collection and extraction, the questionnaires were processed using SPSS statistical software for analysis. Descriptive statistics were utilized, including frequency, frequency percentage, mean, and standard deviation.
Discussion
This study uses the one-sample t-test for analyzing and measuring the questions. To identify which scale of the Balanced Scorecard approach is prioritized, the Friedman test was utilized. Furthermore, to determine which micro-variable of the Balanced Scorecard approach’s scales received the highest score, the mean and, more specifically, descriptive charts were used.
In this regard, we discuss the 4 main research questions.
First question:
According to the one-sample t-test, since the significance level (sig) is 0.005, which is less than the standard level of 0.05, and given that the t-test value is reported as 2.944, which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.39, which is 0.39 higher than the population mean (3).
Second question:
Considering the one-sample t-test, since the significance level (sig) is 0.0001 and this value is less than the standard level of 0.05, and given that the t-test value is reported as 6.606 which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.58, which is 0.58 higher than the population mean (3).
Third question:
Since the significance level (sig) is 0.0001 and this value is less than the standard level of 0.05, and given that the t-test value is reported as 4.261, which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.37, which is 0.37 higher than the population mean (3). Therefore, it can be generally concluded that after the implementation of the Electronic Fund Request System, from the internal processes perspective (except for the two dimensions of binding instructions and lack of focus), the performance of the employees of the General Treasury is satisfactory.
Fourth question:
Considering the one-sample t-test, since the significance level (sig) is 0.0001 and this value is less than the standard level of 0.05, and given that the t-test value is reported as 5.137, which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.47, which is 0.47 higher than the population mean (3). Therefore, it can be generally concluded that after the implementation of the Electronic Fund Request System, from the growth and learning perspective (empowerment, culture and values, satisfaction with the work environment, quality of training courses, and satisfaction with professionalism), the performance of the employees of the General Treasury is satisfactory.
Conclusion
The findings of the study indicated that empowerment, with an average rank of 3.25, secured the highest rank and was of significant importance. Subsequently, culture and values, quality of training courses, job satisfaction, and satisfaction with the work environment were also deemed important. This research provided a holistic view of the performance of the employees of the General Treasury, rather than focusing on just one aspect of performance. In essence, alongside financial measures, aspects such as customer experiences, employee growth, and process improvement and efficiency were also taken into account.
Accounting and various aspects of finance
Javad Shekarkhah; Mohammad javad Salimi; Seyed Soroush Ghazinoori; Ali Hedayati Bilondi
Abstract
AbstractPension funds in Iran use a defined benefit pension plan, and their sustainability is important. However, the evaluation of their sustainability has always been criticized. Minimum reporting and simple accountability indicators do not meet the informational needs of stakeholders. Thus, the main ...
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AbstractPension funds in Iran use a defined benefit pension plan, and their sustainability is important. However, the evaluation of their sustainability has always been criticized. Minimum reporting and simple accountability indicators do not meet the informational needs of stakeholders. Thus, the main issue is to identify the indicators and standards for a comprehensive evaluation of financial sustainability. To address this issue, the theoretical foundations of sustainability evaluation of pension funds and the indicators applied by other countries and international organizations were examined. The indicators were presented to experts for receiving their opinions and, to reach a consensus on key indicators, a Fuzzy Delphi method was applied. For ranking and developing a combined indicator, the final indicator was obtained using experts' opinions and the SWARA method. 27 indicators in four dimensions were extracted from the theoretical foundations: equity, adequacy, financial, and innovation. According to the results of the Fuzzy Delphi method, 15 key indicators were finally confirmed. Among the key indicators, the support ratio obtained the first rank, while the replacement rate and penetration coefficient obtained the second and third ranks, respectively. The results of the SWARA method confirmed the combined indicator consisting of the equity dimension (1 sub-indicator), the adequacy dimension (3 sub-indicators), and the financial dimension (11 sub-indicators). The weight of equity, adequacy, and financial in the combined indicator is equal to 6%, 21%, and 73%, respectively. The support ratio, the present value of the Assets to Liabilities Ratio, and the actuary analysis obtained ranks 1 to 3. According to the combined indicator, the financial dimension has the highest importance, and despite difficulties such as a lack of resources and liquidity to pay current obligations, attention is focused on equity, adequacy, and innovation. However, combined indicators should always be reviewed.IntroductionOne of the challenges faced by pension funds and stakeholders in this system is how to assess financial sustainability and reporting. The governance structure, stakeholder relations, management, and accountability of pension funds necessitate attention to the evaluation of sustainability. Occupational pension schemes must provide necessary information regarding retirement plans. The information should be presented in a way that stakeholders can monitor and assess the financial health of occupational pension schemes and determine whether they are capable of fulfilling their contractual obligations. International organizations generally use indicators that are based on accessible information from different countries and therefore have the highest utility for comparison.In recent years, combined indicators have become one of the most commonly used analytical tools in many fields of social realities. Combined indicators have been widely accepted as useful tools for decision-making and information communication. Combined indicators are a combination of simple indicators with specific weights, where the weights indicate the relative importance that each of them should have in the final overall indicator. Determining the simple and combined indicators for assessing financial sustainability requires a precise understanding and attention to the characteristics of retirement plans, as these characteristics will vary from one organization to another and across different retirement schemes. This research aims to investigate and study the indicators used by international organizations and other countries, providing a scientific basis for evaluating and reporting the financial sustainability of pension funds.MethodologyConsidering the objective of the research, it is of an applied nature. In terms of implementation, this research is field-based. The research is of a mixed nature, meaning it consists of two components: qualitative and quantitative. The research, in terms of data collection, is conducted in a real and unadulterated manner and falls into the category of descriptive (non-experimental) research with a survey and exploratory approach. To properly conduct the research and achieve scientific results, four main stages of development and actions have been undertaken.The first stage involves reviewing and studying the theoretical foundations of evaluating the financial sustainability of pension funds and the indicators used in other countries, as well as identifying evaluation models used by international institutions to access proposed indicators, seek expert opinions, and obtain consensus on them. The second stage includes seeking expert opinions on the extracted key indicators from the theoretical foundations of the research to select acceptable indicators based on the conditions of Iranian pension funds. The Fuzzy Delphi method was used to seek expert opinions. In the third stage, the SWARA method was used to determine the weights of key indicators. Finally, in the last stage of the research, the findings and results are compared and aligned with the combined indicators used by other countries and international institutions. Results and DiscussionThis study analyzes a significant number of indicators of pension system sustainability. In conducting this research, using literature and scientific texts, the indicators for evaluating the sustainability of pension funds were identified in terms of adequacy (6 indicators), equity (4 indicators), financial (14 indicators), and innovation (3 indicators). Based on the consensus of experts, key indicators were finalized in three dimensions. The results indicate a combined indicator consisting of the dimensions of equity (1 sub-indicator), adequacy (3 sub-indicators), and the financial dimension (11 sub-indicators). In the next stage, using the SWARA method, weights were assigned to each of the indicators. Based on the ranking performed in the combined indicator, the equity dimension, including one indicator (implicit pension debt), accounts for 6% of the weight of the combined indicator. The adequacy dimension, composed of indicators such as replacement rate, asset growth rate, and asset growth rate to inflation ratio, accounts for approximately 21% of the weight of the combined indicator. Lastly, the financial dimension, being the most influential, accounts for 73% of the weight of the combined indicator and includes indicators such as population coverage ratio, support ratio, dependency ratio, consumption-to-resource ratio, consumption growth rate-to-resource ratio, current asset value-to-obligations ratio, accumulation rate, insurance contribution-to-pension payment ratio, actuarial analysis, economic dependency ratio of the elderly, and funding ratio. Considering the obtained combined indicator, it can be stated that the financial dimension indicators have the highest importance, followed by the sub-indicators of the adequacy dimension.ConclusionThe results of this study indicate that reporting and evaluating the financial sustainability of pension funds have faced challenges, including the lack of consensus on evaluation indicators. Published reports on the status and financial performance of pension funds have not been aligned with the characteristics of pension funds and stakeholder needs. Additionally, it is observed that some of the theoretical indicators mentioned in the literature do not correspond with the indicators used by international organizations (particularly the actuarial ones). According to the combined indicator, the financial dimension has the highest importance, and despite difficulties such as lack of resources and liquidity to pay current obligations, attention is focused on equity, adequacy, and innovation. However, combined indicators should always be reviewed.To address the existing issues at the operational, supervisory, and standard-setting levels, sufficient and effective measures need to be taken to advance the goals of sustainability assessment and reporting. Standard-setting organizations in the field of sustainability can play a crucial role in enhancing sustainability knowledge through educational development. At the organizational level, strong official support and senior management commitment are required for the development of sustainability assessment processes, and necessary training should be provided. It is important to pay more attention to the concepts and indicators of sustainability assessment to foster a better mindset towards sustainability and reporting. Regulatory bodies and stakeholders should employ innovative approaches in their assessments, including the performance of pension funds. The use of simple indicators may not provide sufficient information, so it is better to utilize combined indicators and update them to align with the characteristics of the pension fund's operating environment.
Accounting and various aspects of finance
Amir Moradi; hamideh asnaashari; Mohammad Hossein Rohban; Mohammad Arabmazar Yazdi; MohammadHosien SafarZade
Abstract
Design Science Research Methodology (DSRM) is a solution-oriented approach for conducting research that transcends mere understanding of existing situations, aiming to generate innovative and novel artifacts to realize desired outcomes. Despite its widespread use in other technical and managerial domains, ...
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Design Science Research Methodology (DSRM) is a solution-oriented approach for conducting research that transcends mere understanding of existing situations, aiming to generate innovative and novel artifacts to realize desired outcomes. Despite its widespread use in other technical and managerial domains, and more than two decades since the first exploration of DSRM in accounting literature, its true potential went largely unrecognized until the recent years, when it gained unprecedented recognition from accounting researchers. In this pioneering research, we analyze trends, identify influential figures, and map the intellectual and conceptual landscape of accounting research related to DSRM. Utilizing co-word analysis, co-authorship techniques, as well as scientific mapping and word cloud visualization, we scrutinize 51 articles from journals indexed in the most recent Australian Business Deans Council (ABDC) list from 2023. Our findings reveal that more than half of the research output is concentrated in the four-year period spanning from 2020 to 2023, signaling a growing interest among accounting researchers in this methodology. The dominant subject areas in design science articles are audit and control, coupled with the integration of emerging technologies and data analytics techniques. The most cited work is Guido Geerts (2011) paper, "A design science research methodology and its application to accounting information systems research" with 140 citations in the Scopus database alone. The most prolific author, Miklos Vasarhelyi, has authored six articles and boasts the most scientific connections with other researchers in this field. The State University of New Jersey, USA, where Vasarhelyi is affiliated, stands as the most prolific institute with eight articles. Guido Geerts receives 177 references from his two articles, earning him the title of the most cited author in the realm of design science in accounting research, while the University of Delaware, where he is affiliated, is also the most cited university. Among countries contributing to this field, the United States leads with the highest number of productive articles and references, totaling 33 articles and 555 references. The International Journal of Accounting Information Systems has published the most articles (20) and received the most references (464). The findings of this research illuminate bibliographic factors, relationships, and thematic orientations within design science research in accounting. They inform researchers and policymakers about the current status and trajectory of this methodology, providing a foundation for the advancement of solution-oriented and applied research in the field of accounting. IntroductionApplied research that seeks solutions to practical issues cannot be pursued through natural science research methods as they aim to design and implement solutions to improve the current situation. For this purpose, the methodology of design science (Simon, 1996) was introduced. Although accounting is a practical field of knowledge, this methodology is less known and utilized in accounting, until the last five years, when it was embraced by accounting and auditing researchers. Thus, in this study, we investigate the bibliometric factors and trends in accounting research using the design science research methodology (DSRM) to answer the following questions:RQ1: What are the main topics of articles related to design science research methodology?RQ2: What are the emerging topics in design science research in accounting?RQ3: Which are the most cited articles, the most prolific authors, the most prolific universities, the most prolific journals, and the most prolific countries in DSRM in accounting?Literature reviewDSRM is a research methodology that focuses on problem-solving (March & Storey, 2008), and its purpose is to create and evaluate artifacts that are used to solve organizational problems through transforming the current state into a desired state (Hevner et al., 2004; March & Smith, 1995; March & Storey, 2008). Considering the focus of this science on problem-solving, the application of design science research can potentially reduce the existing gap between theory and practice (Aken, 2004, 2005; Romme, 2003). MethodologyBibliometric analysis is the application of quantitative techniques (e.g., citation analysis) to bibliometric data (e.g., publication and citation units) (Broadus, 1987; Pritchard, 1969). Researchers apply bibliometric analysis for various reasons, such as discovering emerging trends in the performance of articles and journals, collaboration patterns among authors and research components, and discovering the intellectual structure of a specific field in existing literature (Donthu et al., 2021).In this research, in the first step, the Scopus database was used due to the inclusion of more scientific documents than other databases (Echchakoui, 2020). Then, the relevant keywords were identified and selected, and by setting the query phrase, applying it to the Scopus database and performing the necessary filters, a total of 58 articles from the journals ranked in 2023 rankings by the Australian Business Deans Council (ABDC) were obtained. This number decreased to 51 articles as the basis of analysis after reviewing the content by the authors and discarding unrelated articles. In this research, the VOSviewer software (Eck & Waltman, 2021) was chosen for bibliographic data analysis and visualization. Also, the matplotlib and wordcloud libraries in Python programming language were used for drawing wordcloud, and Microsoft Excel software was used for drawing trend charts.ResultsOur findings reveal that approximately half of the research output is concentrated in the four-year period from 2020 to 2023. The dominant subject areas in design science articles are audit and control, coupled with the integration of emerging technologies and data analytics techniques. The most cited work is Geerts (2011) paper, ‘A design science research methodology and its application to accounting information systems research’ with 140 citations in the Scopus database alone. The most prolific author, Miklos Vasarhelyi, has authored six articles and boasts the most scientific connections with other researchers in this field. The State University of New Jersey, USA, where Vasarhelyi works, stands as the most prolific institute with eight articles. Geerts (2011) receives 177 references from his two articles, earning him the title of the most cited author in the realm of design science in accounting research, while the University of Delaware, where he is affiliated, is also the most cited university. Among countries contributing to this field, the United States leads with the highest number of productive articles and references, totaling 33 articles and 555 references. The International Journal of Accounting Information Systems has published the most articles (20) and received the most references (464).DiscussionThe recently observed surge in publications indicates a growing interest among accounting researchers in this methodology. However, auditing literature hosts more DSR research (nearly half) than financial accounting and other branches. According to co-word analysis results, the design of auditing artifacts based on emerging technology is the predominant research trend, pursued by researchers to enhance audit quality and integrate emerging technologies into the auditing practice. These trends suggest an increasing emphasis on advanced audit and tech research in the future, with a focus on robotic process automation, analytics, and machine learning. In terms of actors at the levels of author, institution, and country, dominance lies with American contributors. Notably, journals that accept DSR papers are primarily technology-related, and mainstream accounting journals, such as The Accounting Review, have not yet embraced this research paradigm.ConclusionThis is the first attempt in accounting literature to conduct a bibliometric study on the research method known as DSR. Given the practical nature of accounting and the criticisms of low practical relevance of accounting research, scholars in the field have turned to DSR in recent years to undertake problem-solving inquiries through the design and evaluation of artifacts. Prospective researchers can benefit from examining seminal and highly cited papers and exploring current hot topics identified by this study to become acquainted with applying this research methodology and selecting trending topics for further inquiries.
Audit Quality
Akram Afsay
Abstract
The purpose of this study is to examine the relationship between financial expertise and the experience of the audit committee chairman with auditor selection, audit fees, and audit quality. To achieve the research goal, a sample equal to 99 companies listed on the Tehran Stock Exchange during the period ...
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The purpose of this study is to examine the relationship between financial expertise and the experience of the audit committee chairman with auditor selection, audit fees, and audit quality. To achieve the research goal, a sample equal to 99 companies listed on the Tehran Stock Exchange during the period from 2015 to 2023, equivalent to 792 company-years, was analyzed using multiple regression analysis based on combined data. The findings showed that the companies whose heads of the audit committee possess financial expertise are more likely to choose the Audit Organization or audit institutions with quality control ‘A’ as their independent auditors. Also, according to the findings, the financial expertise of audit committee heads leads to an increase in audit fees and audit quality. However, this study did not identify a significant relationship between the audit committee chairman's experience with auditor selection and audit fees, but a positive and significant relationship between the audit committee chairman's experience and audit quality was identified. The findings of this study contribute to the literature by documenting that financial expertise and experience of audit committee heads are important for improving the audit process and audit quality.1. IntroductionIn recent years, the significant impact of the audit committee on the effectiveness of the audit process has been confirmed by various researchers (Azizkhani et al., 2023). The chairman of the audit committee is considered the chief executive officer of the audit committee (Ernst & Young, 2013). It is necessary for the chairman of the audit committee, as a leader, to understand the culture of the organization, set clear expectations for the committee members, and consider both management and auditors in their decisions. The chairman of the audit committee, who is more responsible than other members of the committee, plays a vital role in controlling financial reporting and evaluating the effectiveness of the audit committee (Bromilo & Keeler, 2011). The chairman of the audit committee plays a key role in ensuring the quality of financial reports through cooperation with the members of the audit committee, setting the agenda of the committee, communicating with the board of directors, management, and independent auditors, and helping to select the members of the audit committee (Azizkhani et al., 2023). In Iran, the audit committee is one of the basic committees of a company. In 2013, the Securities and Exchange Organization required all listed companies to form an audit committee. This committee is responsible for supervising the work of internal and independent auditors, proposing independent auditors to the general meeting of shareholders for the purpose of appointing, determining the fees, and dismissing independent auditors, reviewing the frequency of audits, receiving audit reports, and ensuring that corrective actions are taken in a timely and correct manner. It is the responsibility of management to address weaknesses and shortcomings, non-compliance with policies, laws, and regulations, and resolve other problems identified by the auditors (Nazari et al., 2019). MethodologyThe present research is a descriptive, correlational study in terms of its applied purpose and the relationship between variables. The data and information used are historical and post-event. The statistical population of this research includes all the companies listed on the Tehran Stock Exchange. The statistical sample of the research comprises all the companies that were active in the stock market from the beginning of 2015 to the end of 2023 and meet the following conditions: 1. Their membership in the Tehran Stock Exchange must have continued throughout the research period. 2. The data needed for the research must have been available to them during the research period. 3. They must not belong to investment, financial mediation, holding, bank, or leasing companies. 4. The end of the financial year for these companies should not have changed during the research period and must coincide with the end of March. Finally, after applying the above conditions, 99 companies (equivalent to 792 company-years) were selected as the statistical sample. To collect the data, the database of Rahavard Novin and the reports published on Codal were used. Research hypotheses were tested based on combined data and using multivariate regression models. ResultIn this study, the effect of financial expertise and the experience of the head of the audit committee on auditor selection, audit fees, and audit quality was investigated. The findings indicate that the heads of the audit committee who possess accounting and financial expertise are more likely to choose a first-rate auditor (The Audit Organization or audit institutions with a quality rating of ‘A’) as an independent auditor. Additionally, audit committee heads with accounting and financial expertise tend to pay higher audit fees and enhance audit quality. These findings are consistent with the results of studies by Azizkhani et al. (2023), Lari Dasht Beyaz et al. (2017), and Ghafaran and Yasman (2018). Therefore, the accounting and financial expertise of the head of the audit committee, as an important and influential factor in the audit process, should receive attention from supervisory and legislative institutions. Due to its significance, it should become a legal requirement for companies listed on the Tehran Stock Exchange. ConclusionAlthough the accounting and financial expertise of the head of the audit committee was identified as an influencing factor in the selection of the auditor and the audit fee, the results of this study showed that the greater experience of the heads of the audit committee does not lead to the selection of a first-class independent auditor and does not significantly affect the audit fee. This finding is not compatible with the results of the studies by Elsayani et al. (2023) and Lari Dasht Beyaz et al. (2017). However, the findings indicate that the greater experience of the heads of the audit committee increases the quality of the audit, which is consistent with the findings of the study by Azizkhani et al (2023). These results indicate that the accounting and financial expertise of the head of the audit committee, as an internationally proven factor, demonstrates the expected performance in companies listed on the Tehran Stock Exchange. However, the experience of the head of the audit committee is not as effective as accounting and financial expertise. In this regard, it may be possible to attribute the weak role of audit committee heads in the selection of auditors and audit fees in our country as a reason for this lack of influence. It is expected that with the passage of time and future legal and regulatory reforms, audit committees will become more efficient and effective, and their heads will play a greater role in improving the audit process.
Accounting and various aspects of finance
Mohamad Marfo; Mohammad javad Salimi; Iman Raeesi Vanani; Mojtaba Alifamian
Abstract
Purpose: The rapid development of technology and extensive environmental changes have accelerated economic growth, and the increasing competition among enterprises has restricted access to profit and increased the probability of enterprises ' financial distress. Due to the effects of high costs of financial ...
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Purpose: The rapid development of technology and extensive environmental changes have accelerated economic growth, and the increasing competition among enterprises has restricted access to profit and increased the probability of enterprises ' financial distress. Due to the effects of high costs of financial distress, its prediction has attracted the attention of researchers since the beginning. Therefore, this paper aims at a bibliometric analysis of financial distress research in the accounting, management and economic areas. Design/methodology/approach: The research method is based on a three-step protocol of dataset setting, dataset refining, and analyzing the data. First, the published articles in the financial distress field were collected from the Web of Science database. Second, the document information was refined, and 801 articles were chosen for literature review in this area. Finally, we used the bibliometric analysis toolbox to investigate the documents. Also, bibliometric analysis in this research was conducted using VOSviewer software. Findings: The findings of this research indicate the existence of six main streams of research (methods of predicting financial distress, predictors of financial distress, restructuring strategy, corporate governance, bank bankruptcy and earnings management) in the field of financial distress. Additionally, the results highlight the importance of social responsibility of the company, also demonstrate that improvements in technology, particularly the use of artificial intelligence tools, have enhanced predicting accuracy. IntroductionIn the life cycle of any company, while there are many opportunities for growth, prosperity, and success, there are also situations where the company may face decline, crisis, and failure. Theoretically, it is assumed that business companies operate indefinitely with the aim of making a profit.However, in the modern era of the global economy, companies not only become significantly more established but also face financial distress more frequently than in the past. In other words, due to globalization and the integration of national economies, the incidence of business failures and bankruptcies has risen. Financial failure is not an instantaneous event but a dynamic and generally lengthy process that affects the company's capital structure, investment policies, and performance. Therefore, identifying the factors of financial distress enables the prediction of an enterprise's financial distress.Identifying the factors influencing the financial distress of companies, firstly, enables the taking of appropriate actions by providing necessary warnings. Secondly, investors can distinguish favorable investment opportunities from unfavorable ones and invest their resources in situations and places where they are less likely to lose money.Given the importance and effects of financial distress and the high rate of failure of current businesses, a literature analysis in this area appears necessary. A review of the literature in the field of financial distress uncovers a multitude and variety of topics in past research. Thus, it is crucial to conduct a systematic review of past research to understand its intellectual structure. Moreover, the keywords used in past research represent the field’s main ideas and topics. Therefore, this study is going to draw the intellectual structure of financial distress research through quantitative techniques of co-word analysis, citation, co-citation, bibliometric, and co-authorship analysis. Research Question(s)This research, employing bibliometric analysis, reviewed the literature on financial distress in the fields of accounting, management, and economics. It also analyzed the content of articles in this field to answer the following questions:RQ1. What is the trend of publications in financial distress research?RQ2. What is the citation structure in the financial distress research?RQ3. What are the fundamental streams of financial distress research?RQ4. What are the emerging themes in the financial distress research? MethodologyThe research method is based on a three-step protocol: dataset setting, dataset refining, and analyzing the data. First, the published articles in the financial distress field were collected from the Web of Science database. Second, the document information was refined, and 801 articles were chosen for literature review in this area. Finally, we used the bibliometric analysis toolbox to investigate the documents. Additionally, bibliometric analysis in this research was conducted using VOSviewer software. ResultsOur findings indicate an increasing trend in the number of research studies on financial distress literature over the past six years, with approximately 54% of articles published during this period.We also document that "In Search of Distress Risk" is the most cited paper, receiving 881 citations in the Web of Science database; "Altman" is identified as the most influential author; and the USA emerges as the most influential country in this research field. This predominance can largely be attributed to the fact that most journals indexed in the Web of Science in the fields of accounting and finance are associated with the United States. Consequently, it is evident that the publication of articles by universities and researchers based in this country is more prevalent than in other countries worldwide. The findings of this research reveal the existence of six main streams of research: methods of predicting financial distress, predictors of financial distress, restructuring strategy, corporate governance, bank bankruptcy, and earnings management in the field of financial distress. Additionally, the results of the research not only underscore the importance of a company’s social responsibility but also highlight how technological advancements, particularly the use of artificial intelligence tools, have enhanced the accuracy of financial distress predictions. Discussion and ConclusionIn this study, first, the evolution of literature in this field has been reviewed through bibliometric analysis over the last four decades. Secondly, from a performance perspective, the indicators related to the article, citation indicators, and combined article and citation indicators have been examined. Additionally, scientific mapping of articles in this field has been conducted through citation analysis, co-citation analysis, co-authorship analysis, and co-word analysis. Finally, clustering and content analysis of the articles in this field have been performed.First, performance analysis was conducted to answer the first two research questions. The research findings confirm that during the last four decades, the literature on financial distress has significantly grown. Examining the growth trend of the articles’ number indicates the effect of changes in the business environment on financial distress. Thus, this trend shows an increase in the number of articles from 2010 onwards, the reason for which is attributed to the financial crisis of 2008, which caused many companies to face financial distress due to the impossibility of financing. Additionally, the trend of published articles shows a significant increase in articles during the period of COVID-19 and after (2020, 2022, 2023). The limitation caused by this public crisis (COVID-19) has increased the possibility of financial distress for companies, and many researchers have investigated this issue. Secondly, to examine the third question of the research, co-citation and bibliographic coupling analysis have been used. As indicated in the mentioned findings section, the studies conducted can be classified into three clusters: predicting financial distress, which is mainly based on accounting data criteria; a cluster of default risk and systematic risk, which provides information about the prospects of the company and the volatility of assets; and finally, the cluster of restructuring strategies, which includes studies that seek to exit this cycle of financial distress using these strategies. The Bibliographic coupling analysis indicates that six main streams of research (financial distress prediction methods, financial distress prediction factors, restructuring strategy, corporate governance, bankruptcy of banks, and earnings management) exist in the financial distress field.Thirdly, the co-word analysis was conducted to answer the fourth question of the research. The increase in the frequency of the words ‘machine learning’ and ‘social responsibility of the company’ in recent years indicates the development of advanced techniques and models in data mining. This development has become so widespread that a large number of research papers are published every year in many fields, including finance, using techniques and algorithms of artificial intelligence and machine learning. Additionally, regarding social responsibility, this trend suggests the primary purpose of enterprises has shifted from profit maximization to increasing shareholder wealth and protecting the interests of other stakeholders, including society and the environment. Therefore, it is expected that future studies will focus increasingly on social responsibility and sustainability.
َAccruals Quality
Abbas Aflatooni; Kefsan mansouri; Zahra Nikbakht
Abstract
The accounting information quality and its relationship with financing decision-making is one of the important issues that attract interest from researchers. However, the way accounting information quality affects financing costs during the COVID-19 pandemic is a topic that has not been explored in domestic ...
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The accounting information quality and its relationship with financing decision-making is one of the important issues that attract interest from researchers. However, the way accounting information quality affects financing costs during the COVID-19 pandemic is a topic that has not been explored in domestic research. The purpose of this research is to investigate the effect of the accounting information quality on the cost of debt and to explore how this effect mainfested during the pandemic of COVID-19. In this regard, the data from 137 firms listed on Tehran Stock Exchange for 2012-2022 (1057 firm-years) have been analyzed. The generalized least squares (GLS) approach was employed to fit the models and fixed effects for years and industries were also controlled. The research results for the entire period demonstrate that an increase in accruals quality (as a proxy for accounting information quality) leads to the cost of financing through debts and this decrease is more pronounced for innate accruals quality than for discretionary accruals quality. Furthermore, the findings suggest that during the period of the COVID-19 pandemic, the impact of accruals quality and its innate and discretionary components on the cost of debt diminished. The results of the robustness tests using decile-ranked values of accruals quality support the main findings.IntroductionThe global pandemic of COVID-19 and the economic recession related to it brought many challenges to companies in most countries (Barai & Dhar, 2021). Due to the widespread effects of this disease and the various and costly measures taken by countries to control this pandemic, during the outbreak of COVID-19, the economic activities of companies faced a serious challenge (Aljughaiman et al., 2023). COVID-19 had a significant negative impact on the employment level of the workforce, reduced economic activity, and created high levels of uncertainty in many financial markets (Zhang et al., 2020). These conditions have most likely hurt the accounting information quality (Pham et al., 2023; Chen et al., 2023) and due to the inverse relationship between the accounting information quality and the cost of debt, it has led to an increase in the cost of debt. However, most of the empirical evidence in this regard is related to developed countries such as the United States, the United Kingdom, and Australia, and the evidence on emerging markets (such as the Iranian capital market) is limited in this regard. Therefore, this study aims to investigate the relationship between the accruals quality and the cost of debt and to compare the extent of this relationship during the COVID-19 pandemic and other years.Literature ReviewIn accounting, accruals refer to a part of earnings that does not carry cash flow and is a product of the accrual accounting system. Therefore, accruals represent the difference between earnings and cash flows (Nallareddy et al., 2020). Since accruals are affected by managerial discretion, the accruals quality can be used to evaluate the accounting information quality and predict future cash flows (Le et al., 2021). The COVID-19 pandemic has significantly affected the global economy (Zhu & Song, 2021), involved many businesses in financial difficulties (Albitar et al., 2020) and intensified their dependence on resources provided by creditors and investors (Shen et al., 2020). Most likely, these conditions have affected the accounting information quality (Pham et al., 2023). During the COVID-19 pandemic, most companies have had enough motivation for earnings management (Lassoued & Khanchel, 2021). However, earnings management causes the financial information reported by companies to be inconsistent with their actual situation, and this means reducing the accounting information quality (Tariverdi et al., 2012). According to these materials, the research hypotheses are presented as follows:H1: An increase in the quality of accruals causes a decrease in the cost of debt.H2: In the period of the COVID-19 pandemic, the intensity of the effect of accruals quality on the cost of debt has decreased.MethodologyThis research is practical, analytical, quasi-experimental, correlational in terms of research purpose, and retrospective and post-event in terms of the time dimension of the data. To collect financial and accounting data, Rahvard Novin database and reports published on Codal website were used, and Stata software was used to analyze the data. To fit the models, the generalized least squares approach was used.ResultsThe results show that compared to other years, during the COVID-19 pandemic, the accruals quality (the cost of debt) has decreased (increased) by 27% (35%). Also, the results indicate that an increase in accruals quality decreases the cost of debt. Furthermore, our results show that compared to other years, during the COVID-19 pandemic, the intensity of the effect of the accruals quality on the cost of debt has decreased.DiscussionThe research findings show that an increase in accruals quality significantly decreases the cost of financing. So, in order to reduce financing costs from debts, managers are advised to be diligent in improving the companies' accounting information quality. Finally, our results show that the cost of debt has increased during the COVID-19 pandemic, due to the decline in accruals quality and its components.ConclusionOur results show that with the increase in the quality of accruals, the cost of financing through debts has a significant decrease, and this decrease is more for the innate components of accruals quality than for its discretionary part. In addition, the findings indicate that during the COVID-19 pandemic, the intensity of the effect of the accruals quality and its innate and discretionary components on the cost of debt has decreased. The results of supplementary tests confirm the research main findings.
Accounting and various aspects of finance
shokrollah khajavi; soraya weysihesar
Abstract
Dividend policy is one of the most important topics in financial literature. CEOs with a high level of authority are motivated to use dividends payout as a strategy to build a reputation in capital markets, aiming to obtain external financing on favorable terms. However, the expected net value of such ...
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Dividend policy is one of the most important topics in financial literature. CEOs with a high level of authority are motivated to use dividends payout as a strategy to build a reputation in capital markets, aiming to obtain external financing on favorable terms. However, the expected net value of such a reputation depends on the likelihood of external financing, which is associated with low profitability and high volatility of cash flows. Therefore, this study aims to investigate the effect of CEO authority on the dividends payout probability in the conditions of low profitability and high volatility of cash flow. In doing so, 128 companies listed on the Tehran Stock Exchange were examined from 2014 to 2021. The results show that the CEO authority has a negative and significant effect on the payment and increase of dividends. Furthermore, low profitability and high volatility of cash flow increase the negative effect of the CEO's authority on the increase of dividends. However, this factor does not have a significant moderating effect on the relationship between CEO authority and dividends payout. Additionally, financial limitations do not have a significant moderating effect on the relationship between CEO authority and payment and increase of dividends. IntroductionThe decision to pay dividends represents one of the most critical choices for managers. The theoretical foundation linking the CEO's behavior and the company's dividend payment is grounded in agency theory. Agency theory suggests that managers, who have control over the company's cash flows, might prioritize their own interests over distributing cash to shareholders. Paying dividends to shareholders diminishes the resources under managers' control, and consequently, reduces their power. Additionally, paying dividends heightens the likelihood of capital market scrutiny on the company, as it often leads to an increased probability of sourcing external financing for investment projects. Financing projects internally circumvents this oversight and the risk that funds may not be accessible or may only be available at high costs. Therefore, agency theory predicts that managers have incentives to portray financial weakness, thereby justifying their decisions not to pay or increase dividends. On the other hand, there are instances where a company's cash flow may be uncertain, such as when the company experiences low profitability and high volatility of cash flow. These two increase the probability of using external financing and are not influenced by powerful CEOs. Therefore, the uncertainty in cash flow overshadows the decisions related to dividends. This is attributed to the fact that powerful CEOs often have greater concerns regarding credit and reputation. Investors often view CEO power as indicative of a greater misalignment between managerial and shareholder interests, signaling weak internal governance and heightened risk of entrenchment or expropriation. Therefore, to provide funds to companies managed by powerful CEOs, investors demand higher returns, which results in an increase in the cost of external financing. Research indicates that powerful CEOs, akin to managers of firms with weak governance structures, encounter higher costs when raising external financing. Furthermore, when anticipating an increase in the need for external funds, these CEOs have a stronger incentive to mitigate reputational concerns by paying dividends. Therefore, powerful CEOs are more likely to pay dividends to invest in reputation, particularly in scenarios of lower profitability and higher cash flow volatility. Based on these considerations, the purpose of this research is to investigate the effect of CEO power on the probability of paying dividends under conditions of low profitability and high volatility of cash flow. Research Questions or HypothesisIn line with the research’s objective, this study seeks to answer the question: Does CEO power affect the probability of paying dividends? Also, do low profitability and high volatility of cash flow have a moderating effect on the relationship between CEO power and the probability of paying dividends? MethodsThe statistical population of this study comprises companies listed on the Tehran Stock Exchange. The research hypotheses were tested on 128 companies over an eight-year period from 2014 to 2021, using multiple regression model and logistic regression. The data necessary for measuring the variables and testing the research hypotheses were primarily sourced from the Rahavard Novin software, audited financial statements, and other reports available on the companies’ websites, Codal and the Securities and Exchange Organization. ResultsThe results show that the power of the CEO has a negative and significant effect on the payment and increase of dividends. Additionally, conditions of low profitability and high volatility of cash flow further amplify the negative effect of the CEO power on the increase of dividends. However, these conditions do not have a significant moderating effect on the relationship between the CEO power and the payment of dividends. Similarly, financial constraints do not have a significant moderating effect on the relationship between the CEO power and the payment and increase of dividends. Discussion and ConclusionThe negative effect of the CEO power on the payment and increase of dividends is in line with agency theory. This theory posits that managers, who have control over the company’s cash flows, might prioritize their own interests over distributing cash to shareholders. Paying dividends to shareholders diminishes the resources under managers' control, and consequently, reduces their power. Additionally, paying dividends heightens the likelihood of capital market scrutiny on the company. Therefore, managers may prefer to present a picture of financial weakness, leading them to be less inclined to pay dividends. The research also revealed that while financial constraints, as well as the combined effect of low profitability and high volatility of cash flow, have a negative and significant relationship with the payment and increase of dividends, financial constraints do not significantly moderate the relationship between CEO power and the payment and increase of dividends. Furthermore, low profitability and high volatility of cash flow do not have a significant moderating effect on the relationship between CEO power and the payment of dividends. However, they do exacerbate the negative effect of CEO power on the increase of dividends. The findings align with the signaling theory of dividend policy. The Information content or signaling theory predicts that in a signaling equilibrium, where a reduction in dividends is associated with a decrease in shareholder wealth, managers are motivated to avoid such outcomes. Therefore, they choose a dividend policy where the declared dividend is lower than the expected dividend. This approach allows them to maintain consistent cash dividend even if subsequent cash flows turn out to be lower than expected. This consideration leads to the prediction that when future cash flow is highly volatile, the dividend payout ratio will be lower. In fact, this implies that when facing uncertainty in cash flow, companies prefer to maintain a low dividend ratio due to the dividend signaling property. They aim to avoid the subsequent losses of dividend cuts, as reducing dividends may lead to a significant drop in the company’s value. The absence of a significant impact from financial constraints and the interaction of low profitability and high volatility of cash flow on the decisions of powerful CEOs to pay dividends indicates that managers likely weigh other factors when determining dividends. Additionally, the need to maintain and build the reputation of powerful CEOs does not depend on paying dividends.
Financial audit
AliAkbar Javan; jafar babajani; mohamad marfo; Farokh Barzideh
Abstract
In this study, by using the Fuzzy Delphi research methodology and getting the expert opinions, it was tried to identify indicators for improving audit quality approved by experts in order to design a suitable model for the Economy of IRAN by utilizing a confirmatory factor analysis model. Also in this ...
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In this study, by using the Fuzzy Delphi research methodology and getting the expert opinions, it was tried to identify indicators for improving audit quality approved by experts in order to design a suitable model for the Economy of IRAN by utilizing a confirmatory factor analysis model. Also in this research, the gap between current and desired situation of audit quality indicators in IRAN is investigated. Finally, the dimensions of audit quality are ranked in terms of importance. For this purpose, following the International Auditing and Assurance Standards Board, 60 indicators were identified. These indicators were classified in five dimensions: a. Input factors with 21 indicators; B. Process factors with 10 indicators; C. Output factors with 9 indicators; D. Key interactions with 10 indicators; and E. Contextual factors by 10 indicators. Data were analyzed by utilizing R, Amos and Super Decisions software. The findings indicate that 54 indicators have been adopted, which provide a model for improving the Audit Quality. Also the results of comparing the current and desired situation of audit quality improvement indicators shows a significant difference between the current situation of the audit quality and the desired environment in Iran. Finally, the results of ranking the dimensions affecting the improvement of audit quality Shows that process factors are in the first place of importance from the point of view of experts, input factors are in the second place, main interactions and contextual factors are both in the third place and output factors are in the fourth place. IntroductionThe accuracy of the operation of each component of the financial reporting supply chain leads to higher-quality financial reporting. One of the most important components of this chain is external audits that, by considering the public interests, assure that the financial information presented in financial reports is fair and reliable (IAASB, 2011; Royaei et al., 2015; Imani Barandagh, Mehrani and Hojjat Shamami, 2016). Therefore, the international auditing and assurance standards board (IAASB), using a holistic approach, published a framework for audit quality in which the main factors contributing to audit quality are introduced. Researchers in different countries, including Iran, are expected to pay attention to the indicators suggested by the IAASB and adjust these indicators according to the context in which audit firms operate to help those involved in the financial reporting supply chain, especially auditors, to improve audit quality.Thus, conducting a study aimed at developing a model for audit quality improvement in Iran, considering the indicators suggested by the IAASB to improve audit quality and enhance the position of the auditing profession in Iran.Research Question(s)The present study can answer this question: What is the audit quality improvement model in Iran?Literature Review2.1. Audit quality definition:There is still no comprehensive, worldwide, and consensual definition, and thus, audit quality can be introduced as a complex and multidimensional concept (Mashayekhi et al., 2013; Alavi and Vakili Fard, 2021) that cannot be limited to a simple definition and the opinions of all those involved in the financial reporting supply chain should be taken into account (Bonner, 2008; Knechel et al., 2012; IAASB, 2014; Mohammadrezaei et al., 2019).2.2. Efforts to improve audit quality:Financial crises in recent decades have called into question the auditing profession and audit quality. Therefore, Policymakers have made attempts to identify key indicators of audit quality. As a more considerable step, in 2014, the IAASB developed a framework for audit quality in which the main factors contributing to audit quality were introduced. The IAASB has introduced the main factors contributing to audit quality in this framework and believes that following the framework in the economic environment of each country can lead to high-quality audits and improve the position of the auditing profession in society.MethodologyThe present study is applied research in terms of purpose and descriptive survey in terms of the data collection method. The purpose of this study is to identify the indicators of audit quality improvement in Iran and develop a model for audit quality improvement. To this end, the fuzzy Delphi method and the confirmatory factor analysis (CFA) technique are employed.3.1. Statistical population and sampling methodThe statistical population of this study comprises audit experts (the partners and senior managers of audit firms that are a member of the IACPA and Iran audit organization). The expert panel members were selected using the purposive sampling technique and 80 questionnaires were distributed among the audit experts, and finally, 58 questionnaires were collected to analyze the data.Results4.1. The importance level of the research indicators based on experts’ opinions (the results obtained from the fuzzy Delphi method)According to the obtained results, no indicator is removed, and all the indicators play a role in improving audit quality in Iran and are confirmed by experts. 4.2. Audit quality improvement modelIn the next step, the CFA technique was used to extract the research final model. To this end, first, the first-order one-factor CFA model related to audit quality improvement was fitted, and after removing items with factor loadings less than 0.5, 54 indicators remained. The final research model, which is a model for improving audit quality in the economic environment of Iran, was formed as described in Figure 2. Discussion and ConclusionThis study, using the fuzzy Delphi method and obtaining the opinions of 58 experts, seeks to identify audit quality improvement indicators and design a model suitable for the economic environment of Iran. To this end, based on the theoretical framework, 60 indicators were collected and categorized into five dimensions: a) input factors with 21 indicators, b) process factors with 10 indicators, c) output factors with 9 indicators, d) key interactions within the financial reporting supply chain with 10 indicators, and e) contextual factors with 10 indicators. The results show that 54 out of 60 indicators in five separate dimensions are accepted, which represent the model for audit quality improvement in the economic environment of Iran according to experts’ opinions as described in the aforementioned model (Figure 2).
Accounting and various aspects of finance
Mehdi Nikravesh
Abstract
This study examines the effect of firms’ chief executive officers’ overconfidence on their firms’ profitability and the predictability of this profitability. The study tests hypotheses regarding the significant positive impact of chief executive officers' overconfidence on profitability ...
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This study examines the effect of firms’ chief executive officers’ overconfidence on their firms’ profitability and the predictability of this profitability. The study tests hypotheses regarding the significant positive impact of chief executive officers' overconfidence on profitability and its predictability. This is accomplished using the Generalized Method of Moments regression analyses on data from 257 CEOs of firms listed on the Tehran Securities Exchange over a sixteen-year period. The initial results indicate positive impacts of overconfidence on firms’ profitability and the predictability of future profitability. The robustness of the findings was tested by altering the profitability measures from return on assets (ROA) and return on equity (ROE) to Tobin's Q, as well as by changing the proxy for managerial overconfidence. These checks emphasize the role of overconfidence in the examined context. These findings support the positive roles of employing overconfident managers in the firms. By contributing to the limited body of literature on the positive effects of managers’ overconfidence, the findings can be used by investors, analysts, and other users of the results to consider overconfidence in their analyses of profitability and its predictability.Keywords: Managerial Overconfidence, Profitability, Predictability Of Future Profitability, Behavioral Approach IntroductionManagerial overconfidence, the individual tendency to be optimistic about the firm’s future and their power over it (Skala, 2008; Hribar and Yang, 2016), is one of the most significant biases studied in finance and accounting literature. Prior research has shown the negative role of this behavioral bias on firms’ finance and financial reporting features such as dividend payment (Deshmukh et al., 2013; Mashayekh & Behzadpur, 2014), finance policies (Malmendier & Tate, 2005; Malmendier & Tate, 2008), financial restatement (Presley & Abbott, 2013; Shekarkhah et al., 2019), and management earnings forecasts (Mehrani & Taheri, 2015; Hribar and Yang, 2016; Sheri Anaghiz et al., 2019). While numerous studies have focused on the negative impact of managerial overconfidence, there are relatively few that have explored the positive aspect of the bias. One of the positive impacts of overconfidence may include the improvement of firms’ profitability and its predictability (Kim et al., 2022).Because of their optimistic viewpoint regarding future firm performance, overconfident managers often invest in R&D and creative activities, potentially resulting in higher profits for their firms (Galasso & Simcoe, 2011; Hirshleifer et al., 2012; Xia et al., 2023). These activities may have long-term outcomes, including profitability. Consequently, the performance of firms managed by overconfident chief executive officers tends to be more positive compared to other firms. Moreover, due to the long-term investments made by overconfident CEOs, the future profitability of their firms is often higher compared to those managed by not-overconfident managers. Therefore, the predictability of future performance tends to be higher in firms that have overconfident managers (Kim et al., 2022). These theoretical predictions require empirical testing, and this paper conducts such an examination in an emerging market context, specifically the Tehran Securities Exchange.Several important reasons exist for studying the effects of firms' chief executive officers' overconfidence on their firms' profitability and the predictability of this profitability. First, this study heightens the understanding of economic decision-makers regarding the potential impacts of overconfidence, which is useful for perceiving its economic outcomes in firms. Second, it can reveal the role of bias in an emerging market. Third, this research employs dynamic panel data analyses to test the hypotheses, as some prior studies have shown a serial correlation between dependent variables, including profitability and predictability (McNamara & Duncan, 1995; Mashayekhi & Mennati, 2012; Kim et al., 2022), which has been overlooked in previous research concerning the role of overconfidence in profitability and its predictability. Fourth, as suggested by Kim et al (2022), there is less evidence about the positive impacts of overconfidence compared to its negative effects. This paper contributes to the literature by presenting evidence about the positive role of managerial overconfidence. Literature ReviewOverconfident managers usually possess a positive outlook on their abilities and they tend to forecast the future optimistically (Heaton, 2002; Hribar and Yang, 2016). This viewpoint often leads to overinvestment, especially in R&D and creative activities (Galasso & Simcoe, 2011; Hirshleifer et al., 2012). Therefore, there is a higher probability of achieving greater profitability in firms managed by overconfident managers. Based on this, the first hypothesis is developed as follows.H1: Managerial overconfidence has a significant positive impact on firms’ profitability.Overinvestment in firms led by overconfident CEOs is often long-term. By creating competitive advantages through these investments, these firms can experience continuous profits (Kim et al., 2022). Therefore, these profits can be more predictable than the profits of firms managed by non-overconfident managers. This expectation can be formulated into a hypothesis as follows.H2: Managerial overconfidence has a significant positive impact on the predictability of firms’ profitability. MethodologyThe study’s hypotheses were tested using Generalized Method of Moments regression analyses on data from 257 CEOs of firms listed on the Tehran Securities Exchange over a sixteen-year period (2007-2022). Initial analyses were conducted using the study’s main proxy for managerial overconfidence, as introduced by Sheri anaghiz et al. (2019). Return on Assets (ROA) and Return on Equity(ROE) are two main proxies for measuring profitability. Additional analyses, as the robustness checks, examined the hypotheses by changing the measure of overconfidence to overinvestment proxy introduced by Schrand & Zechman (2012) and changing the measures of profitability to Tobin’s Q. To assess predictability, I used the correlation between present and future profitability changes. I tested the hypotheses using two regression models that included control variable such as financial leverage, firm size, sales growth, earnings growth, growth opportunities, earnings volatility, discretionary accruals, and lagged dependent variables. ResultsThe primary results indicated positive impacts of overconfidence, as measured by the main proxy, on firms’ profitability and predictability of future profitability, as indicated by proxies such as Return on Assets and Return on Equity. The robustness checks, which involved changing the profitability measures from these proxies to Tobin’s Q, showed the significant effects of managerial overconfidence on profitability and its predictability. Further robustness checks, which involved changing the managerial overconfidence proxy to an overinvestment proxy, emphasized the role of overconfidence in the examined context. Overall, the findings support the hypotheses of the research. DiscussionThe results showed the significant role of CEOs’ overconfidence in generating profits and improving their predictability. These findings highlight the importance of the behavioral approach in explaining the positive effects of CEOs’ cognitive bias on organizational performance. These findings are consistent with previous studies by Hirshleifer et al. (2012), Zavertiaeva et al. (2018), Alberts (2018), and Kim et al. (2022), which also support the idea that employing overconfident CEOs can benefit firms. ConclusionThis paper highlights the significance of managerial overconfidence in shaping firms’ profitability and its predictability. The findings shed light on one of the most important reasons why overconfident managers are hired in firms and how their presence can impact the predictability of financial performance. These results can be valuable for investors when making decisions about firms and for analysts when analyzing both present and future financial performance. The main limitation of the paper is that the sample did not include the financial firms such as banks, insurance companies, and investment firms.AcknowledgmentsI thank my family for their continued support. Managerial overconfidence, the individual tendency to be optimistic about the firm’s future and their power over it (Skala, 2008; Hribar and Yang, 2016), is one of the most significant biases studied in finance and accounting literature. Prior research has shown the negative role of this behavioral bias on firms’ finance and financial reporting features such as dividend payment (Deshmukh et al., 2013; Mashayekh & Behzadpur, 2014), finance policies (Malmendier & Tate, 2005; Malmendier & Tate, 2008), financial restatement (Presley & Abbott, 2013; Shekarkhah et al., 2019), and management earnings forecasts (Mehrani & Taheri, 2015; Hribar and Yang, 2016; Sheri Anaghiz et al., 2019). While numerous studies have focused on the negative impact of managerial overconfidence, there are relatively few that have explored the positive aspect of the bias. One of the positive impacts of overconfidence may include the improvement of firms’ profitability and its predictability (Kim et al., 2022).
Financial audit
Mohammad Hassanjani Khoshkroudi; Iman Dadashi; Bahram Mohseni maleki rastaghi; Hamidreza Gholamnia roshan
Abstract
The aim of this study is to develop a comprehensive model that identifies the non-fragile variables affecting the quality of tax audit. We analyzed 511 tax files from Mazandaran province in the period spanning 2012 and 2021. Initially, through interviews with experts and literature, 64 factors affecting ...
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The aim of this study is to develop a comprehensive model that identifies the non-fragile variables affecting the quality of tax audit. We analyzed 511 tax files from Mazandaran province in the period spanning 2012 and 2021. Initially, through interviews with experts and literature, 64 factors affecting the quality of tax audits were identified. These factors were categorized into three groups: characteristics of taxpayers, tax auditors, and macro factors. Subsequently, the relevant data were applied to Bayesian Model Averaging (BMA), Time-Varying Parameter Dynamic Model Averaging (TVP- DMA), and the Time-Varying Parameter Dynamic Model Selection (TVP-DMS) models. Among these, the BMA model demonstrated the highest accuracy based on the error rate. After model estimation, 17 main indicators were identified as influential variables in three areas. In the realm of tax auditors, these included the quality of past period tax audits, work experience, individual or group handling of audits, auditor expertise, auditors’ use of information, auditor’s workload, conducting audits across multiple tax sources, interactions with related parties, the presence of unofficial invoices, and the use of others’ business cards. In terms of intra-company variables, accrued earning management and debt ratio were identified. Finally, macroeconomic variables impacting the quality of tax audits were found to be inflation, unofficial exchange rates, tax complexity, tax fairness, the business environment index, and the social capital index. IntroductionFactors affecting the quality of tax auditors can be divided into three groups: characteristics of taxpayers, tax auditors, and macro factors. The current challenge in evaluating factors that determine the quality of tax auditors lies in the diversity of theories and the absence of a specific, universally accepted model. On one hand, the multitude of potential explanatory variables affects the quality of tax auditors. On the other hand, this abundance makes the use of classical econometric models problematic. One method to address the uncertainty in selecting variables and choosing the appropriate model is to employ conventional techniques in Bayesian econometrics. These include Bayesian Model Averaging (BMA), Bayesian Maximum Likelihood Averaging Model (BML), Time-Varying Parameter Dynamic Model Averaging (TVP-DMA), and Time-Varying Parameter Dynamic Model Selection (TVP-DMS). Little research has been conducted in the field of tax audit quality. Furthermore, to date, there has been no research that attempts to model this index using non-linear Bayesian approaches and time-varying parameters simultaneously; such an approach has not yet been adopted. Literature ReviewThe lack of tax revenue and non-payment of taxes pose significant challenges to the development of countries. In recent years, the tax gap has widened in both developing and developed countries. The tax gap is defined as the difference between the taxes that are legally owed and the amount of tax actually collected. Non-compliance with tax laws by both taxpayers and tax officials is a fundamental issue in emerging and developing economies. Tax audit is one of the methods employed to achieve the necessary compliance with tax laws (Aia et al., 2016). Combating tax evasion is a fundamental objective of all global tax systems, for which there are generally two basic strategies. One strategy is the establishment and enhancement of reliable self-assessment systems, and the second is the implementation of risk-based tax audits (Dehghani Doyle, 2019). Therefore, the primary objective of this study is to develop a model aimed at enhancing the quality of tax audits. MethodologyThe research focuses on the tax files of all taxpayers, both individuals and legal entities, which have been audited by the Mazandaran province tax organization between 2010 and 2021. The sample comprises information extracted from tax files of taxpayers with files valued at 10 billion Rials and above. This threshold of 10 billion Rials was set to exclude small taxpayers, who generally do not have a substantial information burden, thus focusing on a more specific level of taxpayers. Following interviews with experts from the tax organization and university professors, and a review of past research, a total of 64 factors influencing the quality of tax audits were identified. These factors were categorized into three main groups: macro variables, characteristics of taxpayers, and characteristics of tax auditors. BMA approach has been used in this research. ResultsFrom the viewpoint of tax audit service providers, establishing strategies to enhance the quality of tax audits is essential. This includes creating and reinforcing facilities systematically, conducting joint and integrated audits, and defining mechanisms to ensure auditors' independence. To effectively implement these strategies, it is crucial to consider the various dimensions of factors that affect the quality of tax audits. To achieve this objective, information on the indicators of the 64 factors affecting the quality of tax audits was input into three models: BMA, TVP-DMA and TVP-DMS. Based on the error rate, the BMA model demonstrated the highest level of accuracy. Following the model estimation, 17 main variables were identified. These variables include: the quality of tax audit of the past period, job experience, whether the case should be handled individually or as a group, auditor expertise, the extent of auditors’ use of received information, auditor’s work pressure, transactions with related parties, the presence of unofficial invoices, using other people’s business cards, accrued profit management, debt ratio, inflation, unofficial exchange rate, tax complexity, tax fairness, business climate index, and social capital index.Based on the results of the research, the following suggestions are proposed:Mechanization of all tax audit processes.Establishing an integrated system of a smart database of circulars, instructions, and regulations.Implementing measures and efforts to provide all tax auditors with access to the financial and economic microdata of taxpayers.Development and implementation of integrated tax audit software across all sources.Emphasizing the quality and substance of the content in issued tax audit reports. DiscussionThe identified variables are divided into three main categories: tax auditor variables (the quality of tax audit of the past period, job experience, whether the case should be handled individually or as a group, auditor expertise, the extent of auditors’ use of received information, auditor’s work pressure, transactions with related parties, the presence of unofficial invoices, using other people’s business cards), Internal variables (accrued profit management; debt ratio), and macroeconomic variables (inflation, unofficial exchange rate, tax complexity, tax fairness, business climate index and social capital index). ConclusionGiven the scarcity of comprehensive research in the field of tax audit quality, a multifaceted model has been designed to address this gap. It provides a comprehensive perspective on the quality of tax audit. Focusing on all dimensions of tax audit quality fosters the development of a systemic perspective in this field. Expanding the systemic perspective is expected to enhance the efficiency of the tax audit system. This improvement in efficiency can lead to more effective tax collection across different economic sectors, ultimately contributing to broader economic development.
Accounting and various aspects of finance
Sajad Naghdi; Roghayye Jeddi
Abstract
The willingness of accountants to participate in the certified public accountant (CPA) exam has led to a highly competitive and challenging environment. Therefore, the aim of this research is to explore the lived experiences of CPA candidates. Given the psychological orientations, the unique scientific ...
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The willingness of accountants to participate in the certified public accountant (CPA) exam has led to a highly competitive and challenging environment. Therefore, the aim of this research is to explore the lived experiences of CPA candidates. Given the psychological orientations, the unique scientific and social structure of the candidates, and the multi-dimensionality of the exam, an interpretive paradigm and the qualitative method of phenomenology were employed for an in-depth study without statistical calculations. This study involved 37 participants, comprising 16 CPAs and 21 individuals who were rejected candidates, chosen through purposeful sampling. Data collection was conducted using the semi-structured interview method until the theoretical saturation limit was attained. Data analysis was carried out in five stages using Giorgi's method. The analysis yielded four main themes: weaknesses and limitations, structural challenges, strengths, and solutions to enhance the exam's quality. Each main theme encompassed three sub-themes with 99 narratives. Additionally, despite differing perspectives among candidates, a strong emphasis on the lack of educational resources, particularly in accounting and auditing courses, was noted. The findings also highlight a need to broaden the exam's scope to cover technical skills and reduce theoretical questions. Overall, the research underscores the significance of developing educational resources and focusing on practical questions to address the primary concerns of the candidates. IntroductionThe willingness of accountants to participate in the certified public accountant (CPA) exam has led to a highly competitive and challenging environment. Therefore, the aim of this research is to explore the lived experiences of CPA candidates. Since the accounting profession is continuously evolving and its complexity is increasing every day, it is necessary to consider this dynamic in the process of determining the qualification of certified public accountant. Some professionals have raised concerns about the design of the CPA exam, particularly regarding questions that are incorrectly framed, ambiguous, or have multiple or no correct answers. This issue often leads to candidates wasting time on such questions during the exam, a loss that cannot be compensated. Furthermore, the exam's administration also poses problems, such as an unfavorable physical environment and the use of non-professional proctors, contributing to stress. These factors collectively result in anxiety and psychosis both during and after the exam. Therefore, the systematic evaluation of various dimensions of the certified public accountant exam with the direct participation of the candidates can help identify and rectify the existing gaps and limitations. The findings from this research could then inform policy-making and program formulation within the certified accountant community.Literature ReviewConsidering the importance of the role of certified public accountant in society, the process of selecting and verifying their qualifications is also very important. For the first time, at the end of the 19th century, chartered accountants emerged as an institution in Britain, which at that time had the most advanced financial and economic system. Early in the 20th century, this institution started working in the United States of America. However, the pathology of the process of determining the qualification of a certified public accountant in Iran has shown several key challenges. These challenges include exam content and conducting method, necessary features to become a CPA, certification conditions and exam structure.MethodologyGiven the psychological orientations, the unique scientific and social structure of the candidates, and the multi-dimensionality of the exam, an interpretive paradigm and the qualitative method of phenomenology were employed for an in-depth study without statistical calculations. This study involved 37 participants, comprising 16 CPAs and 21 individuals who were rejected candidates, chosen through purposeful sampling. Data collection was conducted using the semi-structured interview method until the theoretical saturation limit was attained. Data analysis was carried out in five stages using Giorgi's method.ResultsThe analysis yielded four main themes: weaknesses and limitations, structural challenges, strengths, and solutions to enhance the exam's quality. Each main theme encompassed three sub-themes with 99 narratives. Additionally, despite differing perspectives among candidates, a strong emphasis on the lack of educational resources, particularly in accounting and auditing courses, was noted. The findings also highlight a need to broaden the exam's scope to cover technical skills and reduce theoretical questions.DiscussionObtaining the title of a CPA is a coveted goal for accountants from the onset of their careers. Consequently, it is essential to ensure that individuals who successfully navigate through the CPA qualification process possess the minimum required skills and expertise. The dynamic nature of economic, social, technological, environmental, and legal components continually influences the competencies and capabilities required of certified public accountants. Currently, the CPA exam in Iran faces criticism from professional accounting members, highlighting a clear concern: the existing procedures for determining the qualifications of CPAs are not adequately keeping pace with the rapid environmental changes.ConclusionIn general, the findings of this study indicate the importance of developing educational resources and focusing on practical questions, reflecting the primary concerns of CPA exam candidates. The lack of educational resources were emphasized by the majority of participants. Therefore, it is necessary for the community of certified public accountants to collaborate effectively with academic professionals. This collaboration should aim to produce textbooks and exam questions that are closely aligned with the curriculum, particularly in areas of accounting and auditing. It is recommended to include questions that assess talent skills such as comprehension, reasoning, and verbal abilities, as well as technical competencies like computer and Excel skills. Furthermore, the design of the questions should be such that they can be answered effectively only by candidates with relevant work experience (practical work) and those who have engaged in extensive and in-depth study (beyond mere memorization) of the subject matter. Considering the nature of the CPA exam, it is suggested to incorporate a wide range of questions to thoroughly evaluate a candidate's knowledge across all subjects. This approach should extend beyond just a few standards or specific areas to ensure that the candidates possess a well-rounded understanding of the entire curriculum.
Accounting report
Ahmad Mahdavi; Ali Zabihi; Abassali Pouraghajan
Abstract
The purpose of this research is to evaluate the challenging areas of accrual accounting implementation in the General Department of the Ministry of Economy and Finance of Mazandaran province. The methodology of this study is mixed. In the qualitative part, through systematic screening, the challenging ...
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The purpose of this research is to evaluate the challenging areas of accrual accounting implementation in the General Department of the Ministry of Economy and Finance of Mazandaran province. The methodology of this study is mixed. In the qualitative part, through systematic screening, the challenging areas of accrual accounting implementation in the public sector are identified. Subsequently, these dimensions' reliability is assessed in two stages of Delphi analysis. Finally, in the quantitative part, through interpretive ranking analysis, the study seeks to evaluate the areas identified in the context of the General Department of the Ministry of Economy and Finance of Mazandaran province. The results of the study in the qualitative part indicated the existence of 9 challenging areas for the implementation of accrual accounting in the public sector, and during the process of fuzzy Delphi analysis, 8 criteria were confirmed as the reasons for the gap in the implementation of accrual accounting. Then, in the quantitative part, the study determined that the challenge of applying accounting standards of the public sector is a key factor in creating a gap in the implementation of accrual accounting in the General Department of the Ministry of Economy and Finance of Mazandaran province. The results also indicate that the public sector accounting standards, despite various amendments over the years, have tried to improve the implementation of accrual accounting in the public sector.IntroductionWith the emergence of accounting in the public sector, the nature and form of responsibility and accountability has changed so that organizations gradually moved towards transparency through accounting. These organizations were the guardians of public interests and had to consider themselves responsible for the needs of citizens. The dominant approach at the time of the formation of the role of accounting in the public sector was to focus on the cash basis. In doing so, public sector organizations tried to identify and disclose revenues and expenses identically and at the time of occurrence (Ismail, 2023). However, with the beginning of paradigm changes in the broad field of human sciences, this part of the accounting functions of the public sector has also changed, and many organizations have started moving towards the accrual basis in the disclosure of financial events from the mid-80s. In essence, accrual accounting has been considered the cornerstone of reforming financial information systems in public sectors. This shift was created in response to the acceptance of changes from traditional public management (PM) to modern public management (NPM), driven by the low efficiency of accountability and transparency systems. On the other hand, the emergence of legitimacy approaches, borrowed from business management to promote accountability in the public sector, has fueled the development of citizen rights management mechanisms in the last decade, transforming traditional public financial management (PFM) into modern public financial management (NPFM) (Dissanayake and Dellaportas, 2023). MethodologyIn terms of the results, this study is considered part of development research. This is because the issue of identifying the challenging areas of implementing accrual accounting in the public sector has been investigated in previous research as a main variable or complementary to other operational aspects of government accounting, such as budgeting, responsiveness, internal controls, and others. However, it has not been considered as a theoretical framework for explanation in the General Department of the Ministry of Economy and Finance of Mazandaran province. Conducting this study can help the development of theoretical and analytical literature in this field of study. The existence of this gap in the literature led us to present a model and evaluate the challenging areas of implementing accrual accounting in the public sector through the combination of qualitative and quantitative analysis processes. Therefore, in terms of the type of data, this study should be considered mixed, as the qualitative section identifies the challenging areas of accrual accounting implementation in the public sector through systematic screening, and Delphi analysis is used to confirm the reliability level of the identified dimensions. Then, based on the process of interpretative ranking analysis in the quantitative part, the study seeks to evaluate the challenging areas of accrual accounting implementation in the General Department of the Ministry of Economy and Finance of Mazandaran province. ResultIn this study, an effort was made to identify the most relevant dimensions that contribute to gaps in the implementation of accrual accounting in the public sector. This was achieved through systematic screening of research literature and a subsequent Delphi analysis for reliability assessment of these dimensions. Then, through interpretive ranking analysis, the study aimed to determine the most challenging areas in implementing accrual accounting in the General Department of the Ministry of Economy and Finance of Mazandaran Province. The specific analysis revealed that the challenge of applying public sector accounting standards is the most significant factor contributing to the gap in the implementation of accrual accounting in the General Department of the Ministry of Economy and Finance of Mazandaran Province. ConclusionIn interpreting these results, it should be noted that although the public sector accounting standards have undergone various amendments over the years to improve the implementation of accrual accounting, there remains a lack of coverage in aspects of compliance with Clause (d) of Article (28) of the Accession Law. Certain provisions in the law that regulates a part of the government's financial regulations (2), specifically those concerning spending credits and acquisition of capital assets, suggest that the absence of distinct headings in alignment with the program and budget organization could facilitate the reallocation of resources to different expenditure categories within organizations. This is an issue in the public sector for which a specific mechanism, as per Article (30) of the Program and Budget Law, has not been approved, thus impacting the ability to commit and accurately allocate credits and expenses for capital assets. Additionally, although Circular No. 210786/57, dated 11/7/2014, was issued to public sector organizations to address the obligations of excess reporting and credit allocation for saving realized costs, there exists an implementation gap in this directive. This gap affects the supervisory role in liability obligations, leading to an excess in credit allocation often recorded under other debt headings instead of being classified as reserves for realized expenses or capital obligations.
Financial Accounting
Mohammad Hossein Setayesh; Zahra Rezaeianzadeh
Abstract
The main goal of this research is to identify and rank factors affecting innovation in accounting. In this research, firstly, accounting specialists were selected by purposeful sampling methods, and then qualitative data were collected using open questionnaires. After analyzing the collected data using ...
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The main goal of this research is to identify and rank factors affecting innovation in accounting. In this research, firstly, accounting specialists were selected by purposeful sampling methods, and then qualitative data were collected using open questionnaires. After analyzing the collected data using the phenomenology method, 11 factors were identified. Subsequently, a survey involving 17 faculty members from the accounting departments of Iranian public universities was conducted, and the Bayesian best-worst method was employed to rank these identified factors. Based on the results, the top 3 factors affecting innovation in accounting, in order of importance, include advances in information technology, changes in the business environment, and the level of financial knowledge and analytical skills of accountants. In order to improve the context of innovation in accounting, the results of this research suggest accountants should have general information about business and advances in information technology. They also, as the human capital of the innovation process in accounting, should continuously improve their level of financial knowledge and analytical skills.IntroductionIn recent years, the information technologies, such as cloud service models, big data, artificial intelligence, and blockchain are rapidly transforming the business environments and have raised concerns about the future of the accounting profession. Although these emerging technologies are still designed for the day-to-day work of accountants, they can significantly change the future work of accountants (Moll & Yigitbasioglu, 2019). It seems that in the face of the said technologies, the provision of accounting services, such as bookkeeping, preparing financial statements, preparing tax returns, and auditing, have all been subject to radical innovations (Bowles et al., 2020). According to the accounting literature, a new set of skills is necessary for accountants due to these emerging technologies. This is while job advertisements of Iranian companies (https://www.irantalent.com), still demand traditional job roles for accountants and instead, new job titles, such as fraud investigation specialist and senior data analyst have been emerging that can cover the newly defined job roles of accountants by literature. It seems that to reinforce the position of accountants in organizations, a change in accounting and in other words, the search for innovation in accounting is necessary.To address the lack of accounting literature in the field of innovation, the primary objective of this study is to identify and rank the factors that impact innovation in accounting by using qualitative methods, to initiate the expansion of innovative thinking and the creation of innovative ideas in accounting.MethodologyThis study used the phenomenology method to identify the factors affecting innovation in accounting. The accounting specialists were chosen as an informant using purposeful and snowball sampling methods. The twelve accounting specialists who participated in the research offered a wide range of services, including auditing, consulting, financial statement preparation, and tax accounting. Data collection was carried out mainly by means of an unstructured questionnaire supported by a telephone interview. Finally, by the use of Colaizzi’s method of data analysis, the factors affecting innovation in accounting were identified (Wirihana et al., 2018, p. 31).The Bayesian best-worst method was selected to rank the factors affecting innovation in accounting. The decision-makers were seventeen faculty members in the accounting department of Iranian public universities who had publications that transfer the concept of some sort of innovation in accounting. Bayesian best-worst method is based on pairwise comparison (Mohammadi & Rezaei, 2020). Pairwise comparison data from the decision-makers who participated in the research was collected through a standard questionnaire. Finally, using Python code for the chosen method, the factors affecting innovation in accounting were ranked.Results and DiscussionAccording to the results of Colaizzi’s method of data analysis, eleven factors were identified, and using the Bayesian best-worst method, the optimal weight of all factors was calculated. Table 1 presents the overall optimal weight and rank of factors affecting innovation in accounting. The findings indicate that the factors of advances in information technology (0.127806), changes in the business environment (0.12760311), and the level of financial knowledge and analytical skills of accountants (0.10951763) are respectively the most important factors. According to the optimal weight of all factors, it can be seen that none of the factors are irrelevant to innovation in accounting, because the weight of the least important factor is equal to 0.06665689. In fact, neither factor has an optimal weight lower than 0.065.ConclusionThe field of research into innovation in accounting is new, therefore this research generates new insight into the area. Among the practical implications, the study suggests that accountants consider environmental factors, such as advances in information technology and constantly update their knowledge and skills. It also suggests that they should improve their overall business knowledge by familiarizing themselves with different companies' operations and financial processes. Moreover, it suggests that they develop their analytical skills to be able to clarify the implications of decision-making results. Lastly, this study suggests that to achieve innovation in accounting, the conduct of research related to innovation and the cooperation of accountants can generate ideas to improve innovation in accounting.The study was qualitative in nature, as a result, this study cannot argue that the nature of innovation in accounting and the factors affecting it remain unchanged over time. Therefore, this study recommends more research in this field to contribute to a better understanding of innovation in accounting.
Accounting and various aspects of finance
Ghodratolla Barzegar; Mohsen Faghih
Abstract
A significant part of capital market research is stock price synchronicity and its influencing factors. When considering these factors, financial report readability and CEO media exposure emerge as critical elements in fostering a conducive environment for conveying understandable information to the ...
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A significant part of capital market research is stock price synchronicity and its influencing factors. When considering these factors, financial report readability and CEO media exposure emerge as critical elements in fostering a conducive environment for conveying understandable information to the market. Therefore, this study examines how CEO media exposure influences the relationship between financial report readability and stock price synchronicity. In this context, we analyzed data from 99 firms spanning the years 2014 to 2021. Our findings are rooted in the components of the information environment, encompassing both information supply and demand. To address the endogeneity of financial report readability, we employed the 2SLS method. Findings showed that the financial report readability led to a decrease in stock price synchronicity. This relation was more pronounced in firms whose managers had greater media exposure. Additional tests revealed that, on the information supply side, low institutional ownership, and on the information demand side, companies characterized by higher information asymmetry imply greater growth opportunities and more significant agency problems. Furthermore, the effect of CEO media exposure on the relationship between financial report readability and stock price synchronicity was found to be strengthening. These findings underscore the valuable roles played by financial report readability and CEO media exposure in enhancing information quality and reducing the impact of unsystematic factors on stock price movements.IntroductionOne area that has exacerbated the financial crisis on the capital market is the heightened sensitivity of stock prices to market and industry news relative to firm-specific information. In this regard, the phenomenon of stock price synchronicity has become a challenging keyword in economic, financial and accounting literature, especially in emerging markets.Wang (2014) considered it to have informativeness in the pricing process and compared it to a type of noise affecting both financial and non-financial decisions. Loughran and McDonald (2014) believe that the information environment plays a decisive role in creating and shaping stock price synchronicity. Therefore, this research aims to study the impact of financial reporting readability and CEO media exposure as components of the information environment and information communication tools on stock price synchronicity.Research QuestionsDoes the CEO media exposure influence the relationship between financial reporting readability and stock price synchronicity?Do components of an information environment (including information supply and demand) change the effect of CEO media exposure and financial reporting readability on stock price synchronicity?Literature Review2.1. Financial Report Readability and Stock Price SynchronicityBai et al. (2018) argued that when the cost of collecting and processing information is high, inexperienced investors may gather incomplete firm-specific information from stock price volatility and movements. They tend to rely on market or industry information, resulting in information inefficiency and risk within the market. On the other hand, when the financial reporting readability is high, the cost of processing and gathering information for investors is reduced by facilitating access, and stock returns synchronicity decreases.2.1. CEO Media Exposure, Financial Report Readability, Stock Price SynchronicityLiu and McConnell (2013) have stated that managers are more likely to abandon devaluation-based efforts after media criticism. They have argued that this effect can be attributed to negative media coverage regarding the imputation of shareholder value. Additionally, Cahan et al. (2020) have shown that CEO media exposure leads to an improvement in the quality of financial reporting because it exposes managers to the risk of lawsuits.MethodologyThe necessary data and information were gathered from the annual financial reports of firms listed on the stock exchange between 2014 and 2021, as well as from the Codal and RDIS databases. Additionally, the data related to stock price synchronicity was extracted from the database of the Financial Information Processing Center (Fipiran.com) at Tehran Securities Exchange Technology Management Co. Finally, 99 firms and 792 observations (year-firm) were screened and analyzed.ResultsThe findings showed that financial report readability led to a decrease in stock price synchronicity. This relationship was more pronounced in firms whose managers had greater media exposure. Additional tests revealed that on the information supply side, low institutional ownership, and on the information demand side, companies with higher information asymmetry represent more growth opportunities and greater agency problems. Additionally, the effect of CEO media exposure on the relationship between financial reporting readability and stock price synchronicity was strengthened.DiscussionThe findings showed that the improvement of the readability index causes the weight of firm-specific information on the stock price to exceed that of market and industrial information, leading to a reduction in the phenomenon of stock price synchronicity. Additionally, CEO media exposure has strengthened the relationship between financial report readability and stock price synchronicity. In other words, the readability of financial reporting in firms with higher media coverage has intensified the stock price synchronicity. The interpretation of these results is that managers use media tools to mark the quality of financial reporting and take steps towards reliable and useful information due to the risks that the media may create for them. Therefore, the CEO media exposure can be considered as one of the new tools and mechanisms of information sources in the emerging market of Iran, which has informational content. Robust tests also demonstrated that, in terms of information supply, firms with a low percentage of institutional shareholders, and in terms of information demand, firms with higher growth opportunities and greater agency problems observed a more pronounced effect of CEO media exposure on the relationship between readability and stock price synchronicity. Based on these results, institutional shareholders can be considered as a tool for supplying and transmitting information to the market. Also, the growth opportunities and representation problems can also be counted among the factors that affect the demand for information.ConclusionThese findings reiterate the beneficial role of financial report readability and CEO media exposure as examples of information quality, reducing the influence of unsystematic factors on stock price movements.
Accounting and various aspects of finance
HamidReza Ganji; Shahnaz Mashayekh; Zakiye Seddighi
Abstract
Investors' decision-making processes are influenced by a combination of rational behavior and emotions, particularly during special circumstances where emotional behaviors may overshadow rationality. This study aims to examine the influence of investor sentiments on their expectations of future earnings. ...
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Investors' decision-making processes are influenced by a combination of rational behavior and emotions, particularly during special circumstances where emotional behaviors may overshadow rationality. This study aims to examine the influence of investor sentiments on their expectations of future earnings. A sample of 163 companies listed on the Tehran Stock Exchange during the period from 2011 to 2020 was selected to achieve the research objective. Multiple linear regression was used to test the research hypotheses. The results indicate that investors' sentiments do not have a significant relationship with the stability of losses, suggesting that emotional behaviors do not lead to substantial changes in loss stability. Similarly, there is no significant relationship between investors' sentiments and the stability of earnings. Consequently, investors lack a proper understanding of future earnings and losses, which impacts their decision-making processes. Addressing this issue requires relevant officials to take measures to enhance investors' awareness of the overall market and the fundamentals of listed companies, thereby fostering a more informed investment environment. 1- IntroductionBehavioral finance theories underscore the pivotal role of investors' emotional behaviors in determining asset values, challenging the conventional notion that changes in security values are solely driven by fundamental factors (Kim & Ha, 2010). This study aims to investigate the influence of investors' emotions on their expectations of future earnings and to examine how emotions at the capital market level lead to misjudgments in stock valuations. To achieve these objectives, we explore the relationship between investors' emotions and their expectations of future earnings. Specifically, we anticipate that investors may perceive losses as more stable during periods of diminished sentiment and less stable during periods characterized by heightened sentiment. This difference is expected to be more pronounced for companies operating at a loss compared to profitable companies. Literature Review2-1. Investor sentimentThe emergence of behavioral financial sciences has sparked significant interest among researchers, leading to a plethora of studies investigating the emotional behaviors of investors. Noteworthy contributions in this domain include the works of Baker and Wurgler (2007), Cornell (2017), Hua (2020), and Bilel (2020). In recent years, the field of behavioral finance has witnessed efforts to elucidate the mechanisms through which investors' emotions influence stock values and overall stock market performance. 2-1. Investors' Expectations of Future EarningsInvestors' expectations of future earnings encompass the prevailing sentiments and attitudes held by investors regarding the prospective performance of a company, which can range from optimism to pessimism (Aboody, 2018). It is worth noting that researchers often approach survey-based data with a certain degree of caution due to the potential disparity between survey responses and actual behavioral patterns. Consequently, gauging expectations through trading activities provides a means to discern irrational investor behavior. Statement No. 1 issued by the Financial Accounting Standards Board underscores the significance of profit as a metric employed by investors to assess profitability, dividend-paying capability, forecast future earnings, and extend credit to other firms (Sinha, 2016). Therefore, it is evident that a company's profit margin can exert a notable influence on the stock market. 3-2. Investor Sentiment and Their Expectations of Future EarningsThe present research endeavors to explore the impact of investors' sentiments at the capital market level on the misvaluation of stocks. Specifically, it investigates the relationship between these sentiments and investors' expectations concerning future earnings. In this study, we anticipate that investors may perceive losses as more stable during periods characterized by reduced emotional intensity and less stable during periods marked by heightened emotional sentiment. Furthermore, it is posited that the stability of earnings is lower (higher) during periods of low (high) sentiment, with this disparity being particularly pronounced for loss-making companies as compared to profitable ones.The research hypotheses are articulated as follows:H1: There is a negative and significant relationship between investors' sentiments and the sustainability of losses.H2: There is a positive and significant relationship between investors' sentiments and the stability of earnings.MethodologyThis research falls under the category of post-event analysis, utilizing historical information extracted from companies listed on the Tehran Stock Exchange. The statistical population for this study comprises companies admitted to the Tehran Stock Exchange between 2010 and 2019. A carefully selected sample of 1630 company-year observations, was employed for analysis. To test the research hypotheses, composite data were utilized, and multivariate regression models were employed for estimation.ResultsThe first research hypothesis posited that there exists an inverse and statistically significant relationship between investors' sentiments and the sustainability of losses. However, based on the results presented in Table 1, the significance level of the variable representing investors' sentiments surpasses the 5% threshold, indicating that there is no substantial relationship between investors' sentiments and the sustainability of losses. This suggests that investors' emotions do not exert a significant impact on the persistence of losses.Similarly, the second research hypothesis postulated a direct and meaningful relationship between investors' sentiments and the stability of earnings. Yet, the findings in Table 2 reveal that the significance level of the variable related to investors' sentiments exceeds the 5% significance level, signifying that there is no substantial relationship between investors' sentiments and the stability of earnings. In essence, it implies that the sentiments of investors do not wield a significant influence on earnings stability.DiscussionIn the current research, it was initially hypothesized that investors in loss-making companies would perceive losses as more stable during periods characterized by reduced emotional intensity and less stable during emotionally charged periods. These results underscore the complexity of investor behavior and the challenges in accurately predicting how emotions influence investment decisions and expectations. The findings imply that other factors or variables not considered in the current research may play a more substantial role in shaping investors' expectations of future earnings in both loss-making and profitable companies.ConclusionThe research outcomes indicate that in both loss-making and profitable companies, investors' sentiments do not wield a statistically significant influence on their expectations of future earnings. This suggests that investors' expectations regarding future earnings may not be accurately formed. Even in the case of profitable companies, investors' emotions do not appear to significantly impact their profit expectations. These results may be attributed to investors' potentially inadequate understanding of future earnings, which could give rise to emotional behaviors. Addressing this issue calls for intervention by capital market analysts and relevant institutions, with a focus on enhancing investor awareness. Initiatives should be developed to raise investors' knowledge levels, thereby contributing to the normalization of the broader market and the fundamentals of listed companies.It's worth noting that these findings appear to contradict those of Riedl (2021). In the Iranian economic context, these results apply similarly to both loss-making and profitable companies, indicating that emotions may not be a significant factor influencing profit expectations on the Tehran Stock Exchange. Moreover, these findings align partially with the results of BashiriManesh and Oradi (2018).
Accounting and various aspects of finance
Shahla Talari; Fatah Behzadian; Mehdi Safari gerayli; Rahman Saedi
Abstract
Changing the nature of behavioral knowledge in the auditing profession from purely classical processes in the development of auditors' functions to philosophical and cognitive processes has increased the quality of work life in this field. The purpose of this study is to present a model of auditors' ...
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Changing the nature of behavioral knowledge in the auditing profession from purely classical processes in the development of auditors' functions to philosophical and cognitive processes has increased the quality of work life in this field. The purpose of this study is to present a model of auditors' psychological well-being and evaluate identified themes in the auditing profession. This study employs an exploratory methodology with analytical elements. Because of the lack of an integrated framework regarding the recognition of auditors' psychological well-being dimensions, we identified the study's themes through 12 interviews and coded them using thematic analysis. Then, using two processes of fuzzy Delphi analysis and classic Delphi, we analyzed the reliability of the organizing and basic themes. In the quantitative part, to explain the themes confirmed from the Delphi analysis stage in the audit professional functions, we applied the fuzzy network analysis. In this study, according to the theoretical saturation point in thematic analysis, 12 accounting experts participated, and in the quantitative part, 30 auditors with more than five years of experience in the auditing profession who had work experience and technical knowledge participated. The results of the study in the qualitative part indicate the existence of three overarching themes, six organizing themes, and 38 basic themes. Also, based on the result of the Delphi analysis, it was determined that from the total of 38 basic themes, 17 final themes were entered into the fuzzy network analysis in the form of six organizing themes, and the findings showed that the most effective organizing theme of psychological well-being in the context of professional auditing functions is the theme of perception stimulation of auditors. Findings also revealed that strengthening the internal locus of control is the most effective aspect of psychological well-being in auditing. 1- IntroductionExpanding behavioral sciences' influence on auditing in recent decades has transformed auditors' traditional approaches and professional roles, enhancing the quality of auditing reports. This is due to the interplay between professional judgment and auditing standards within the auditors' behavioral and cognitive domains. (Zhao et al,2023). A significant development in auditing knowledge is the concept of psychological well-being. Psychological well-being encompasses auditors' emotional and mental states, their overall life and career satisfaction, as well as their mental efficiency and functionality (Broberg et.al, 2020). According to Chen et al. (2022), well-being is closely tied to an individual's perception of their experiences, leading to higher mental satisfaction and more qualified roles in professional responsibilities. In essence, psychological well-being results in positive emotions, a sense of purpose, autonomy, and the ability to form meaningful relationships with others (Mahmoudi and Sajadi Nejad, 2022). Literature ReviewWhen investigating the findings of a study in the field of Disease Psychology, a group of psychologists, guided by Seligman et al. (1999), concluded that despite significant achievements in developing effective therapies, focusing on the causes of diseases, especially mental ones, can lead to a reduction in fatal diseases in society. They aimed to explore the factors contributing to increased productivity in people's lives and embarked on a new cycle of studies to assess individual capabilities. This effort ultimately led to the development of a gradual psychological well-being approach within the domain of positive psychology. Therefore, one prominent focus in recent years has been on psychological well-being, which seeks to redefine the professional life of individuals through the lens of positive psychology (Haghayeghi and Moghaddam Zadeh, 2022). O’Driscoll et al. (2004) were pioneers in formalizing the concept of psychological well-being within the framework of positive psychology. They emphasized the infusion of happiness and satisfaction into personal performance as a fundamental achievement of this concept.On the other hand, Gurel (2009) emphasizes active participation in the professional environment as key to defining psychological well-being. It involves individuals striving to experience positive self-efficacy and creating a balanced career while attributing meaning to their work relationships. Furthermore, Clark et al. (2007) view psychological well-being as an affective state. They assert that motivation in one's job is driven by the happiness and vitality derived from personal performance, which in turn fosters emotional attachment to one's job. Despite varying definitions of psychological well-being, it is evident that a deeper understanding of this concept is essential for greater effectiveness in the profession. MethodologyThe current study serves a developmental purpose and has an exploratory nature in its results. Furthermore, it adopts a combined approach in data collection. Given the lack of a coherent framework in previous studies for the phenomenon under investigation within the auditing profession, our study aims to present a multi-dimensional model using thematic analysis and the approach outlined by Attride-Stirling (2001) across three coding stages and interviews. In other words, in the first stage, it is attempted to present the themes of the auditors’ psychological well-being model in the form of a multi-dimensional model via analyzing the qualitative part and relying on thematic analysis process. The underlying philosophy of our study combines elements of volunteerism in the universe philosophy with structuralism in the philosophy of science. ResultsGiven the inductive and comparative nature of this study, the basic themes of auditors' psychological well-being are identified in the qualitative phase through thematic analysis. The reliability of these themes is then assessed using both Delphi Fuzzy and Delphi Classic analyses. The study proceeds to identify the most influential themes within the auditors' psychological well-being model through network analysis, specifically employing Fuzzy Analytic Network in the field of auditing. Therefore, thematic analysis was used in the first step to determine the themes related to the auditors’ psychological well-being. Thematic analysis serves as an administrative process that examines the foundations and concepts of the current issue through concurrent content analysis in related studies and interviews to define its dimensions. Typology of thematic analysis according to Attride-stirling (2001) is applied in the present study. The results indicated that strengthening the internal locus of control within the auditing profession (C13) is considered the most critical theme in enhancing psychological well-being in the auditing profession. This theme draws attention to bolstering the professional functions of independent auditors. This basic theme is considered among the organizing themes which stimulate the auditors’ perception and pervasive theme of individual mechanisms in reinforcing psychological well-being. DiscussionThe aim of this study is to conduct a network analysis within the auditors' psychological well-being model to define key factors in the auditing profession. Thematic analysis was chosen to present the model since there was no existing theoretical framework for developing the dimensions of psychological well-being in auditors' professional roles in this study. In total, a hexagonal model was constructed, consisting of three overarching themes, six organizing themes, and 38 basic themes. These themes were developed through 12 interviews with experts and three coding stages, guided by the theoretical saturation point, and were introduced as contributing factors to the development of auditors' psychological well-being. Confirming reliability of the organizing and basic themes was required as two important constructs in the presented model in the qualitative part with the purpose of determining the most effective theme in the auditors’ psychological well-being. Through two separate Delphi Fuzzy and Delphi Classic processes, it was initially found that the six organizing themes displayed high generalizability within recognized categories as pervasive themes. Secondly, out of the 38 primary themes, 21 basic themes were eliminated during two rounds of Delphi Classic analysis based on two criteria: mean and agreement coefficient. As a result, 17 basic themes were confirmed and incorporated into the Fuzzy Analytic Network process. ConclusionTwo key results emerged from the prioritization of organizing and basic themes in the analytical process. Prioritizing organizing themes revealed that the most impactful theme on psychological well-being in the field of professional auditing is 'stimulating the auditors’ perception' (C1), with a relative weight of 0.286, placing it at the top of the matrix. Conversely, 'reinforcing internal locus of control' (C13) was identified as the most crucial basic theme for enhancing psychological well-being in the auditing profession, highlighting its potential significance in strengthening the professional functions of independent auditors.
