Accounting and various aspects of finance
gharibe esmailikia; Mahdis Naseri; Amin Ghanbari
Abstract
In the present world a company’s profile is not substantiated purely in relation to financial issues, rather, a need for the inclusion of environmental and social perspectives arises. According to this, there is a rapidly growing level of awareness of social and environmental activities, and this ...
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In the present world a company’s profile is not substantiated purely in relation to financial issues, rather, a need for the inclusion of environmental and social perspectives arises. According to this, there is a rapidly growing level of awareness of social and environmental activities, and this view has been considered in recent years under the title of sustainability performance. According to the concepts of the contingency theory, the implementation of the sustainability approach can be significantly different depending on the different conditions of the organization. This theory has brought many consequences in management decision-making in an organization, management decisions themselves are affected by their characteristics.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 in the period from 2013 to 2022 (including 1420 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,
Accounting and various aspects of finance
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 competitiveness pressure of companies in this situation imposes costs on companies that can affect the company's financial performance. In this research, the moderating role of ...
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Compliance with social and environmental responsibilities is one of the requirements of the current competitive era, and the competitiveness pressure of companies in this situation imposes costs on companies that can affect the company's financial performance. In this research, the moderating role of competitive strength in the relation between social and environmental responsibilities with financial performance has been investigated. The statistical sample of this research is the companies listed on the Tehran Stock Exchange between 2016 and 2021. By regular screening method, 108 companies have been selected as samples. After checking the classical assumptions of regression, the panel data model with fixed effects has been used. The results showed that social performance has a positive relation with financial performance. The competition strength has a negative moderating role in the relation between social performance with financial performance. Environmental performance has a positive relation with financial performance, and the competition strength has a negative moderating role in this relation. According to the coefficients of variables, the social dimension of the company is more effective in increasing performance than the environmental dimension.
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 ...
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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 past five 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.
Financial Accounting
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.
Financial Accounting
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.
Accounting and various aspects of finance
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).
Accounting and various aspects of finance
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.
Financial Accounting
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 and various aspects of finance
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.
Accounting and various aspects of finance
Mohammad Namazi; Amin Nazemi; Navid Reza Namazi; Esmail Moazzeni
Abstract
In this research, operational budgeting was investigated in the form of four groups of contextual factors, structural factors, human factors and other factors on operational and research budgeting with analytical model, balanced evaluation method. The statistical population of this study is all executive ...
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In this research, operational budgeting was investigated in the form of four groups of contextual factors, structural factors, human factors and other factors on operational and research budgeting with analytical model, balanced evaluation method. The statistical population of this study is all executive bodies subject to Article (5) of the Civil Service Management Law. Data were obtained using 182 questionnaires and analyzed using structural equation method and Smart PLS software. In this model, the balanced evaluation method was adapted to the three-part cycle of performance management and a three-part model of performance management, based on balanced measurement, is obtained. The results showed that the identified structures in operational budgeting have a positive and significant effect on the performance of executive agencies. The structures of “structural factors”, “human factors” and “other factors affecting the implementation of operational budgeting (including personality, acceptance and ability)” have a positive and significant effect on performance, but the structure of “underlying factors” has a significant effect. It does not affect the performance of executive agencies.IntroductionIn traditional budgeting, the goals and emphasis are based solely on financial instruments and accounting of receipts and payments of the public sector (Mio et al., 2022). Also, in the traditional method of budgeting, the ability to plan long-term is limited and the possibility of achieving operations and budget monitoring is very weak.The problem that exists is that organizations pay less attention to budgeting in a new way and as a result, it is not used seriously in strategic decisions. Therefore, the effect of the operational budgeting method on the performance of organizations is not clear (Park & Jang, 2022). On the other hand, despite the sensitivity of the budget and the importance of its economic allocation, this issue has not been seriously considered yet. Therefore, it is necessary to study, discuss and review operational budgeting in organizations.Research QuestionsDespite the different emphasis and requirements of the country's development programs on the implementation of operational budgeting, the following questions are raised:What is the operational budgeting mechanism? What factors, including contextual, structural, human and other factors, are effective on the implementation of operational budgeting? What kind of budgeting model do Iran's executive bodies use? What are the important and influential factors related to operational budgeting? What are the obstacles and problems of operational budgeting in Iran's executive bodies? How to solve the current operational budgeting obstacles and problems?Research hypothesesBased on the theoretical foundations of operational budgeting as well as balanced evaluation and research history, the following hypotheses are presented:The main hypothesis: Operational budgeting variables are effective on the performance of Iran's executive bodies (using the balanced evaluation technique). Sub-hypotheses1) Structural factors in the establishment of operational budgeting are effective on the performance of Iran's executive bodies (using the balanced evaluation technique).2) Background factors in the establishment of operational budgeting are effective on the performance of Iran's executive bodies (using the balanced evaluation technique).3) Human factors in the establishment of operational budgeting are effective on the performance of Iran's executive bodies (using the balanced evaluation technique).4) Other effective factors in the establishment of operational budgeting (including personality factors, acceptance and ability) are effective on the performance of Iran's executive bodies (using the balanced evaluation technique).Literature ReviewThe theoretical foundations of operational budgeting are based on agency theory (Arief, (2020)) and organizational performance improvement (Derfuss, (2016)). In operational budgeting, instead of being based on cost materials, budget information is based on activities, and the results of performance measurement are provided with performance reports. The design and implementation of operational budgeting in any organization is based on three important factors: “planning”, “costing” and “organizational performance evaluation”. Activity-based costing (ABC) is the heart of operational budgeting and the main pillar in budget calculations (Azer and Khadivar, 2013), because activity-based costing is much more suitable for planning and control than traditional methods and provides more accurate information in this field. makes (Namazi, 1998 and 1999).MethodologyThis research is among the few researches that uses the scientific method of construction and experimental proof and is carried out based on pre-determined hypotheses and research plans. (Namazi, 2003). The method of data collection is a questionnaire. The information obtained from the measurement of the variables for the purpose of research tests was used from structural equations and the information was analyzed using Smart PLS version 2 and SPSS version 25 software.ResultsThe value of the T statistic and its statistical significance for the first main hypothesis and all balanced evaluation factors at the 95% confidence level shows as follows:The main hypothesis test: The structures identified in operational budgeting have a positive and significant effect on the performance of executive bodies.The first sub-hypothesis: The structures identified in the operational budgeting structural factors have a positive and significant effect on the performance of executive bodies.The second sub-hypothesis: The strength of the model and the background factors of operational budgeting do not have a significant effect on the performance of executive bodies.The third sub-hypothesis: The structures identified in human factors of operational budgeting have a positive and significant effect on the performance of executive bodies.The fourth sub-hypothesis: The structures identified in other effective factors in operational budgeting have a positive and significant effect on the performance of executive.DiscussionThe purpose of this study was to expand the theoretical foundations and provide empirical evidence in the field of operational budgeting in Iran. This development was done by presenting a conceptual model, explaining the organization's strategy and presenting 5 balanced evaluation criteria and testing related hypotheses. The findings of the study confirmed the theoretical foundations of operational budgeting and balanced evaluation. The results of the main hypothesis test of the research showed that the structures identified in operational budgeting have a positive and significant effect on the performance of executive bodies.ConclusionThe findings of the first, third and fourth sub-hypothesis showed that the structures identified in the structural factors, human factors and other operating budgeting factors of operational budgeting, have a positive and significant effect on the performance of executive bodies.The results of the second sub-hypothesis test showed that the variable of operational budgeting background factors does not have a statistically significant effect on the performance of executive bodies. The reason for this can be related to the governmental nature of executive bodies, non-compliance with the requirement to establish operational budgeting and cultural factors such as the resistance of employees and managers to new changes in the body.
Accounting and various aspects of finance
Javad Shekakhah; Iraj Asghari
Abstract
This article deals with modeling the long-term performance of IPOs in the Tehran Stock Exchange and OTC. Due to the difficulty of determining the definition of the long-term period, modeling was initially conducted for 12 periods. These periods ranged from 3 to 36 months. The purpose of this modeling ...
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This article deals with modeling the long-term performance of IPOs in the Tehran Stock Exchange and OTC. Due to the difficulty of determining the definition of the long-term period, modeling was initially conducted for 12 periods. These periods ranged from 3 to 36 months. The purpose of this modeling was to analyze and compare the results and identify the most suitable periods for explaining the long-term performance of IPOs. Modeling has been conducted at the portfolio level using a Stepwise approach. For this purpose, the monthly time series was formed, and data from 236 IPOs in the Tehran Stock Exchange and OTC markets from 2009 to 2022 have been analyzed. The results showed that the return of the portfolios formed from initial offerings could be explained at a satisfactory level. While the primary factor in explaining the long-term performance of IPOs is market return, the profitability, and its distribution also play a significant role. Finally, the most suitable periods for use as the definition of the long-term period are 12, 21, and 27 months.IntroductionThe long-term performance of Initial Public Offerings (IPOs) has always been disputed by researchers. The inherent challenges of conducting long-term research and the complexities associated with Initial Public Offerings have led researchers to use different methods resulting in inconsistent findings.A prevalent approach in studying long-term IPOs is the use of “factor models” to identify the factors influencing IPO portfolio performance. However, the literature has presented and utilized several factor models. Examples of these models include Fama and French (1993), Carhart (2004), Fama and French (2015), and Ho et al. (2015). Despite some similarities, each of these models employs different factors and variables to explain IPO performance. In recent years, many researchers have criticized the use of these common models in their respective countries, citing reasons such as ineffectiveness of these models. These researchers argue that neglecting the socio-economic context of societies can lead to misinterpretation of return and yield inappropriate results for decision-makers. Consequently, each society should develop and employ its own models. Considering these issues, this research aims to provide models that explain the long-term performance of Iranian IPOs. Specifically, by testing various factors and variables, this study identifies the most effective models for explaining the long-term performance of IPOs in Iran.MethodologyIn this research, a stepwise approach was employed. Monthly data of 236 IPOs between 2009 and 2022 were utilized to construct relevant time series, and the returns of the IPO portfolios were analyzed with respect to potential factors that explain the return. To determine the initial set of variables, a systematic review approach was adopted. Due to the high correlation and multiple proxies for the liquidity factor, the liquidity variables were first reduced to three factors using principal component analysis. In total, 19 different factors and variables were included in the analysis.Given the lack of consensus among researchers regarding the definition of the long-term period, the modeling process in this research considered 12 different periods ranging from 3 to 36 months with a three-month increment. The selection of appropriate models was based on the criteria of accuracy and quality forecast, specifically Theil’s (1975) criterion. Three models that nest met these criteria were chosen, and the corresponding portfolio periods were identified as the defining terms for the long-term period. The validation of the selected models was performed by comparing their adjusted R2 values with those of common models found in the literature. Additionally, out-of-sample testing was conducted using 10% of the data to assess the model’s performance.Results and DiscussionThe research findings indicate that the models developed in this study exhibit a strong explanatory power, accounting for approximately 80% of the variations in the returns of IPO portfolios. Among the different portfolio periods considered, the models constructed using 12, 21, and 27-month portfolios demonstrated superior accuracy and forecast quality according to Theil’s (1975) criteria. As a result, these specific periods were identified as the most suitable definitions for the long-term period in this context. The significant variables identified in the models include market return, profitability, size, and dividend. Although the models generally incorporate a set of relatively common variables, the specific model associated with each defined period can be employed to achieve better results, taking into account the specific characteristics of the long-term period under consideration. Furthermore, it is worth noting that the intercept of the designed models, as well as the intercepts of the common models found in the literature, were found to lack statistical significance.ConclusionBased on the analysis conducted in the research, it can be concluded that utilizing native models specifically designed for IPOs provides a suitable explanation for their long-term performance. The primary factor in explaining the long-term performance of IPOs is found to be the market return. This suggests that the performance of initial offerings is primarily influenced by the overall market conditions, while other variables, such as profitability help modulate this effect. Additionally, the non-significance intercept in the models indicates that there is no evidence of long-term under or over-performance of IPOs in Tehran's financial markets. The superiority of the designed models compared to other common models is evident primarily in the 12-month period. While the performance of the models in other periods depends on the specific model employed.
Accounting and various aspects of finance
Saman Mohammadi; Zahra Oryaie; Ali Naderi
Abstract
Considering the impact of CEO Power on a bank’s performance, CEOs can play a role in social responsibility and earnings management. Given that earnings management in banks can have various effects on other industries and the overall economy, banks tend to practice earnings management more frequently ...
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Considering the impact of CEO Power on a bank’s performance, CEOs can play a role in social responsibility and earnings management. Given that earnings management in banks can have various effects on other industries and the overall economy, banks tend to practice earnings management more frequently than non-financial organizations. Furthermore, due to a lack of transparency and information asymmetry, banks are required to be more accountable to society than other industries. Therefore, this research aims to investigate the impact of CEO Power on the relationship between social responsibility and earnings management in banks. The research sample comprises 16 banks listed on the Tehran Stock Exchange Market and Iran OTC between 2016 and 2021. These banks were selected to test the research hypothesis. The findings of the study suggest that social responsibility has a significant negative impact on earnings management in banks. This implies that an increase in social responsibility may lead to a decrease in information asymmetry and lack of transparency, resulting in a decrease in earnings management. Furthermore, the findings of the study indicate that CEO power does not play a significant role in moderating the relationship between social responsibility and earnings management in banks.IntroductionIndeed, engaging banks in social responsibility practices is expected to be beneficial for their stakeholders. In this context, stakeholders are often attracted to banks with a good reputation for social responsibility. Therefore, executives may engage in social responsibility activities to gain support from stakeholders, defend themselves against stakeholder activism, manage their business reputation, or protect their own careers. However, executives may also engage in social responsibility activities to manipulate earnings management and hide their self-interest motivations, which leads to agency problems. These agency problems arise when executives take opportunistic actions such as earnings management to maximize their profits, increasing the bank's agency costs. Given the influence of powerful CEOs on a bank’s performance, powerful CEOs play a role in social responsibility and earnings manipulation. Therefore, CEO power is one of the most important determinants affecting managers’ decisions.the current research has several important aspects. First, it extends the literature on the effect of commitment to social responsibility activities on firm earnings management, with a specific focus on the banking sector. Second, the research fills a gap in the literature regarding the role of social responsibility in financial reporting. Previous studies have not provided a clear consensus on whether social responsibility commitment has a positive or negative impact on financial reporting quality. Given the diversity of findings reported by previous studies, more research is needed to focus on understanding how social responsibility commitment can affect financial reporting quality, as proxied by earnings management practices.Does social responsibility affect banks' earnings management? Does CEO power have a significant effect on the relationship between social responsibility and earnings management of banks and strengthen this relationship?Literature Review2.1. Corporate social responsibility and earnings managementTo understand the link between corporate social responsibility (SR) and earnings management (EM), previous studies have proposed two perspectives: the ethical perspective and the managerial opportunism perspective. The ethical perspective assumes that EM is negatively associated with SR, while the managerial opportunism perspective argues that EM and SR are positively related. This leads us to our first hypothesis:H1. There is a significant relationship between SR and EM.2.2. Corporate social responsibility, earnings management and CEO powerGiven the influence of powerful CEOs on bank’s performance, powerful CEOs play a significant role in both SR input and earnings manipulation. Therefore, CEO power is considered one of the crucial determinants affecting managerial decisions. Hence, CEO power may have a moderating effect on the relationship between SR and EM. Accordingly, we propose the following hypothesis:H2. Powerful CEOs moderate the SR–EM relationship. MethodologyThe statistical population of this research consists of banks enlisted in the Tehran Stock Exchange Market and Iran OTC. The data from 16 banks for the period between 2016 to 2021 have been analyzed to test the research hypotheses. The statistical method employed in this study is the regression model of mixed data using panel data approach with a random effects estimation.ResultsThe obtained results suggest that social responsibility has a negative and significant effect on bank’s earnings management. In other words, as social responsibility increases, earnings management in banks is expected to decrease. Furthermore, the results show that the significant relationship between social responsibility and earnings management is not maintained when the adjusting variable of the CEO's power is included. In other words, the CEO's power does not have a significant effect on the relationship between social responsibility and earnings management.Discussion and ConclusionWith an increase in activities related to social responsibility, banks experience a decrease in earnings management. This observation aligns with the ethical perspective and the signaling theory, which suggest that social responsibility can serve as a tool to reduce earnings management. Banks with higher levels of social responsibility not only exhibit greater transparency regarding their social responsibility initiatives and stronger engagement with stakeholders, but they also tend to engage in less earnings management. Additionally, the study found that CEO power does not moderate the relationship between social responsibility and bank earnings management. This finding contradicts the theoretical foundations and the research background, which propose that CEOs may use social responsibility to gain stakeholder support, manage their reputation, and defend against stakeholder activism. Therefore, it is evident that relying solely on CEO power and characteristics may not lead to accurate decision-making in this domain. Shareholders and other financial decision-makers should consider factors beyond CEO power when attempting to moderate the relationship between social responsibility and earnings management.
Accounting and various aspects of finance
Gharibe Esmailikia; Raha Mohtasham
Abstract
In recent decades, there has been increasing pressure on governments to improve their performance, and in this regard, the importance of achieving sustainable performance has doubled. The effectiveness of the accounting information system in public sector institutions plays an important role in achieving ...
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In recent decades, there has been increasing pressure on governments to improve their performance, and in this regard, the importance of achieving sustainable performance has doubled. The effectiveness of the accounting information system in public sector institutions plays an important role in achieving sustainable performance. However, the effectiveness of accounting information systems cannot achieve sustainable performance alone due to rapid changes in the world economy. Based on this, there is a growing demand to create a framework of evaluation that is suitable with the characteristics of the public sector organization for directing, managing and evaluating performance towards achieving sustainable performance. Public sector scorecard for measuring performance, is a strategic, result-oriented and multi-dimensional model. This study was conducted with the aim of investigating the relationship between the adoption of the public sector scorecard, the effectiveness of the accounting information system and sustainable performance in the public sector. The statistical population of the research was the financial employees of the governmental offices of Bushehr city, which was determined using Cochran's formula as a sample of 168 people, 175 questionnaires were distributed in 15 governmental offices, and finally 124 completed questionnaires were received and analyzed using structural equations. Data collection was done using Huy and Phuc (2020) questionnaire and data analysis was done using Smart PLS software. The findings showed that the adoption of the Public sector scorecard has a positive and significant effect on the effectiveness of the accounting information system, i.e. data input system, data processing system, data storage system and financial statement system. In addition, the effectiveness of the four components of the information system has a positive and significant effect on sustainable performance.IntroductionThe financial perspective provides a clear picture of the long-term goals of for-profit companies, however, in public sector organizations, this perspective acts as a constraint, not a goal (Kaplan, 1999). The public sector scorecard model is one of the best models used to measure and manage performance in the public sector (Shorvarzi etal, 2011). Accounting information system is considered as a lever to support the effectiveness and efficiency of organizational operations as well as management operations (Huy&phuc, 2020).Due to rapid changes in the global economy, the effectiveness of the accounting information system alone cannot lead to sustainable performance. Based on this, there is a growing demand for an evaluation framework that seems to be appropriate to the characteristics of public sector institutions in order to position, manage and evaluate the functions of the accounting information system in order to achieve sustainable performance. Based on this, adoption the Public sector scorecard is considered a suitable solution for this matter.Research Question(s)The main questions in this research are as follows:Does public sector scorecard adoption has an effect on the effectiveness of accounting information systems (based on its components)?Does the effectiveness of accounting information systems (based on its components) have an effect on sustainable performance in the public sector?Literature ReviewThe limitations of financial resources have caused public sector organizations to continuously review their activities, manage costs, evaluate performance and adopt mechanisms for continuous improvement (Shorvarzi etal, 2011). With the aim of integrating the service improvement and performance management framework used in the public sector, the public sector scorecard was created by Moullin (2017). Balanced scorecard is more than a simple performance evaluation system and can be an important strategic management accounting tool to simplify and transform the organization's mission and strategy (Rashid, 2020). With the aim of improving and promoting accounting performance in order to create useful information for decision-making, accounting information system is a coordinated combination of data input system, data processing system, data storage system and financial statement system. The effectiveness of the accounting information system can only be achieved when each of the mentioned systems can function effectively (Huy&phuc, 2020). The effect of public sector scorecard adoption on the effectiveness of the four components of the accounting information system was considered in four hypotheses. In order to achieve financial and non-financial performance, the accounting information system creates value added for users in terms of providing financial information for planning, control and decision making. Accounting information systems of organizations can improve non-financial performance in the long term and contribute to the sustainable development of the organization. In this regard, the impact of the effectiveness of the accounting information system on sustainable performance was formulated in four hypothesesMethodologyThe statistical population of the research was the financial employees of the governmental offices of Bushehr city, which was determined using Cochran's formula as a sample of 168 people, 175 questionnaires were distributed in 15 governmental offices, and finally 124 completed questionnaires were received and analyzed using structural equations. Data collection was done using Huy and Phuc (2020) questionnaire and data analysis was done using Smart PLS software.ResultsThe results of the eight research hypotheses are presented in Table 1.DiscussionThe findings showed that the adoption of the Public sector scorecard has a positive and significant effect on the effectiveness of the accounting information system, i.e. data input system, data processing system, data storage system and financial statement system. In addition, the effectiveness of the four components of the information system has a positive and significant effect on sustainable performance.ConclusionAccounting information systems play an important role in the activities of organizations, so the special proposal of the research is the need to pay serious attention to the various components of the accounting information system and focus on improving Its effectiveness. Since accounting information systems must measure performance in all aspects, not just the financial aspect, one of the factors affecting this issue is the use of the Public sector scorecard, which can improve the effectiveness of the accounting information system.Sustainable performance requires increasing the efficiency and effectiveness of organizations by taking into account all sustainability factors, so it is suggested to achieve performance sustainability in the public sector in different ways, including paying attention to information prerequisites by providing hard infrastructures. Hardware and software are important, therefore, putting in the agenda to improve the effectiveness of the accounting information system of the public sector through integrated information management can lead to improved performance and in the same direction sustainable performance.
Accounting and various aspects of finance
Hassan Badri Gamchi; Mohammad Hassani; Ahmad Yaghoobnezhad; Ehsan Rahmaninia
Abstract
This paper analyzed the consequences of financial reporting convergence towards integrated reporting in Iran's capital market focusing on agency cost and cost of equity capital. In order to measure the financial reporting convergence towards integrated reporting, a checklist has been used which designed ...
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This paper analyzed the consequences of financial reporting convergence towards integrated reporting in Iran's capital market focusing on agency cost and cost of equity capital. In order to measure the financial reporting convergence towards integrated reporting, a checklist has been used which designed based on the international integrated reporting framework. The agency cost measured using the efficiency criterion based on the ratio of operational expenses to operational revenues. The cost of equity capital estimated based on the expected rate of return using the capital assets pricing model. The research population includes 144 firms listed in the Tehran Securities & Exchange over March 2016 till March 2021. Multivariable regression models were used to test research hypotheses. The findings showed that increase in convergence level of firms’ financial reporting with integrated reporting framework has reduced agency cost and cost of equity capital. These findings suggested that focusing on the benefits of integrated reporting through transparency and completeness of information disclosure has weakened agency conflicts and reduced agency costs. In addition, integrated reporting has reduced the cost of capital in financing decisions due to the adoption of sustainable business model from integrated thinking and the reduction of information asymmetry due to greater transparency for more informed forecasting.
Accounting and various aspects of finance
Mousa Bozorg Asl; Mohammad Ebrahimi noudeh; Javid Yarahmadi
Abstract
This research has been conducted with the aim of experimental test of the effect of political relations on the amount of investment of companies and its efficiency in the period of 2012 to 2019 of companies listed in the Tehran Stock Exchange. The method of data collection is archival and reference to ...
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This research has been conducted with the aim of experimental test of the effect of political relations on the amount of investment of companies and its efficiency in the period of 2012 to 2019 of companies listed in the Tehran Stock Exchange. The method of data collection is archival and reference to databases and the method of data analysis is multivariate regression model using panel data model and fixed effects method. The results show that the relationship between political relations and the amount of investment as well as investment efficiency is positive and significant. These results indicate that companies with political connections have more investment than other companies and investment efficiency is higher in companies with political connections. According to the research findings, it can be seen that companies with political connections invest more and more efficiently than other companies due to their government benefits and privileges, as well as the ease of attracting financial resources.
Accounting and various aspects of finance
gholamreza karami; Ehsan Dolatzarei; Omid Faraji
Abstract
We intended to provide a comprehensive overview of behavioral accounting research. For this purpose, 371 articles published in two specialized journals of behavioral accounting - "Behavioral Research in Accounting" and "Advances in Accounting Behavioral Research"- have been analyzed. These journals are ...
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We intended to provide a comprehensive overview of behavioral accounting research. For this purpose, 371 articles published in two specialized journals of behavioral accounting - "Behavioral Research in Accounting" and "Advances in Accounting Behavioral Research"- have been analyzed. These journals are indexed on the Scopus database and are among the specialist journals ranked by the Australian Business Deans Council. Co-word analysis and social network analysis have been used as the main method. Our analysis shows that emerging issues in recent years in the field of behavioral research have focused on "auditing", "corporate governance", "fraud" and "ethics". Findings show that the article "Online instrument delivery and participant recruitment services: Emerging opportunities for behavioral accounting research" with 167 citations is the most cited behavioral research article. Wicky Arnold is the top author in terms of number of articles with 12 articles. The United States is the top country in the world with 179 articles and 2,210 citations, and the two top universities in the world with 15 articles are the Virginia Commonwealth University and the University of Central Florida. This paper is the first study that conduct a bibliometric analysis of behavioral accounting research focusing on two specialized journals of behavioral accounting.
Accounting and various aspects of finance
mohammad namazi; Zahra Khorramdel Masouleh
Abstract
The purpose of this study is to investigate the effect of green product innovation and green process innovation on company's financial, environmental and economic performanc. The mediating role of environmental management accounting on the relationship between product and green process innovation and ...
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The purpose of this study is to investigate the effect of green product innovation and green process innovation on company's financial, environmental and economic performanc. The mediating role of environmental management accounting on the relationship between product and green process innovation and company performance is also examined. The statistical sample includes 202 companies and the standard questionnaire was used to collect data and the structural equation modeling approach and the PLS method were used to test the hypotheses and the conceptual model of the research. Findings show that green product innovation has a significant impact on the financial, environmental and economic performance of the company, both directly and through environmental management accounting. Green product innovation affects environmental performance in the oil and gas and petrochemical, metal and food industries, as well as economic performance in the metal industry alone. In addition, green process innovation has a significant effect on the financial and economic performance of the company both directly and indirectly through environmental management accounting, but the impact of green process innovation on the environmental performance of the company is only through the accounting variable of environmental management accounting. Green process innovation affects financial performance in oil and gas and petrochemical, metallic and chemical industries and economic performance only in oil and gas and petrochemical industries. In the cellulose industry, neither green product innovation nor green process innovation affects any of the company's operations. Findings show the importance of green innovation and environmental management accounting in improving the company's performance.
Accounting and various aspects of finance
Mehdi Heidari; Alireza Aliakbarlou; Ebrahim Khakpour Heydaranlou
Abstract
Conservatism is an action that is used in conditions of uncertainty and limiting management optimistic behaviors to increase the reliability of financial statements. Financial distress and growth opportunities are among the factors that can improve the level of accounting conservatism. Meanwhile, managers' ...
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Conservatism is an action that is used in conditions of uncertainty and limiting management optimistic behaviors to increase the reliability of financial statements. Financial distress and growth opportunities are among the factors that can improve the level of accounting conservatism. Meanwhile, managers' behavioral characteristics are expected to influence the relationship between financial distress and growth opportunities with accounting conservatism. Therefore, the aim of this study was to investigate the effect of management uncertainty on the relationship between financial distress, growth opportunities and accounting conservatism. The results of this study show, the variables of financial distress and growth opportunities have a positive and significant effect on conservatism. Management overconfidence has no significant effect on the relationship between financial distress and conservatism but it moderates the relationship between growth opportunities and conservatism and has a negative and significant effect on the relationship between them. In other words, that managers with unfavorable financial situation do not have a positive outlook on the future situation of the company and increase the level of conservatism. Managers of large and growing companies also tend to opt for more conservative accounting practices to minimize their political and social costs. On the other hand, overconfident managers are optimistic about the future state of the company and reduce the level of accounting conservatism.
Accounting and various aspects of finance
younes Badavar Nahandi; Gader Babaei
Abstract
Financial information comparability among peer firms in the same industry reflects the similarity and the relatedness of firms’ operating environments and financial reporting. The main aim of this study is surveying the effect of financial information comparability on financial reporting timeliness ...
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Financial information comparability among peer firms in the same industry reflects the similarity and the relatedness of firms’ operating environments and financial reporting. The main aim of this study is surveying the effect of financial information comparability on financial reporting timeliness with emphasis on the moderating role of stock price information ambiguity. In order to achieve the goal of the research, a sample of 118 companies was selected during the period 2011 to 2020 and generalized least squares liner multiple regression method was used to test the research hypotheses. The results show that the financial reporting timeliness increases by enhancing financial information comparability and also study evidence show that this positive effect is more intense for firms with high stock price ambiguity. Efficient investment decisions are not possible without timely and comparable information. The comparability with improving the timeliness, increases the efficiency of the capital market. Also, it can be concluded from the research findings that in the conditions of stock price information ambiguity, the role of financial information comparability in the information transparency of the company environment and timely financial reporting is very important for users. Thus, the financial information comparability extensively increases the usefulness of accounting information for all users, especially in conditions of stock price information ambiguity.
