Accounting tools
Hamid Khodayari; Malektaj Maleki Oskuie; Azar Moslemi; Hasan Hemmati
Abstract
The purpose of this research is to explore perspectives on sustainability in strategic management accounting for the sustainability of companies in the context of financial technologies (FinTech). In terms of research method and based on its purpose and type of results, this study is classified as exploratory ...
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The purpose of this research is to explore perspectives on sustainability in strategic management accounting for the sustainability of companies in the context of financial technologies (FinTech). In terms of research method and based on its purpose and type of results, this study is classified as exploratory and developmental research. Initially, through thematic analysis, the accounting functions of strategic management for corporate sustainability in terms of financial technologies were identified. The reliability of the identified themes was then examined using Delphi analysis. Finally, through scenario analysis, the research aimed to establish strategic management accounting perspectives related to sustainability in financial technologies (FinTech). The results of the first phase of the research, conducted through 13 interviews revealed the identification of 3 overarching themes, 6 organizing themes, and 26 basic themes. IntroductionNeoclassical economists and numerous management theories emphasize the assumption that the primary goal of companies is to maximize shareholder interests under competitive market conditions and limited capacities for acquiring financial resources. Shareholders are regarded as the most critical providers of financial resources necessary to advance corporate goals. Consequently, companies must adopt various significant approaches to secure stable financial resources and maintain their position in competitive market environments. One such approach involves leveraging financial technologies, or fintech, which focus on investing in technological infrastructure to achieve longer-term goals. These strategies aim to influence competitive dynamics arising from economic decisions and address the side effects of the company's operations on other stakeholders. Fintechs are defined as financial operational structures that enhance the scope of services expected by stakeholders through the application of innovative technologies, such as blockchain. Literature ReviewWith the evolution of financial and accounting information technologies and infrastructures, management accounting is increasingly regarded as a dynamic phenomenon requiring reorganization in both cognitive and content dimensions. These changes, which began in 2008 with the emergence of fintech and artificial intelligence, have accelerated significantly in recent years. Fintech refers to innovative methods of financial transactions and reimbursement systems enabled by advancements in computer communication, big data analysis, networking, and artificial intelligence technology. The term fintech, an abbreviated of “financial technology” is often used in the context of financial strategies adopted by commercial businesses. Through fintech, businesses can develop capacities to deliver digital financial services using cutting-edge software and technologies. MethodologyBased on the objective classification in the methodology, this study is considered exploratory because it utilizes expert interviews to identify the driving criteria of strategic management accounting for the sustainability of companies using financial technologies. In terms of its results, the study is developmental, as the combination of phenomena investigated lacks theoretical coherence and an integrated content framework in the study’s context. In terms of data type, this study employs a mixed-method approach. In the qualitative phase, thematic analysis and expert interviews were used to identify the driving criteria of strategic management accounting for corporate sustainability in the context of financial technologies. Subsequently, a Delphi analysis was conducted to examine the reliability of the identified themes. In the quantitative phase, the study utilizes scenario analysis to determine the functional perspectives of strategic management accounting drivers for sustainability in companies using financial technologies. To achieve this, the study focuses on mutual matrix processes and pairwise comparisons of criteria in row "i" and column "j" to identify the most favorable strategic management accounting scenarios for sustainability in the context of financial technologies. ResultIn this study, due to the lack of a coherent theoretical framework regarding the accounting functions of strategic management in the sustainability of companies using financial technologies, thematic analysis was employed in the first phase. During the 13 interviews conducted, a total of 3 overarching themes, 6 organizing themes, and 26 basic themes were identified through three stages of coding. Next, to formulate future scenarios for assessing the sustainability of financial technologies, the link matrix was used to identify the most impactful central organizing themes by analyzing the inputs and outputs of the matrix model through the MiM-Mak matrix. The results of this phase confirmed two key bases: the service cycle costing technique in fintech sustainability and the benchmarking technique in fintech sustainability. These bases serve as the axes for determining possible scenarios for evaluating the functions of strategic management accounting in the sustainability of companies using financial technologies. Through the reciprocal matrix, these scenarios provide a structured approach to describing the phenomenon under investigation. DiscussionThe purpose of this study is to explore perspectives on strategic management accounting in the sustainability of companies in terms of applying financial technologies (FinTech). Based on the results, the most favorable scenarios, in the matrix of mathematical functions is located in the third quadrant, referred to as the "metaphorical scenario of Heraclitus". This scenario highlights the significant role of the service cycle costing technique in fintech sustainability. In analyzing the results, it can be concluded that strategic management accounting, with a focus on the service cycle costing technique in fintech sustainability, seeks to explore the benefits of providing technological financial services to beneficiaries. This approach differentiates itself from traditional methods of delivering financial services by offering more perceptible advantages, such as faster access to financial information, enhanced technical criteria for decision-making, and improved financial support for beneficiaries. Thus, the financial service cycle costing tool, through strategic management accounting, enables these capabilities and fosters more advanced prospects for fintech sustainability at the level of commercial companies. ConclusionThe results of this study indicate that strategic management accounting, with an emphasis on the service cycle costing technique in fintech sustainability, aims to explore the benefits of providing technological financial services to beneficiaries. This approach seeks to differentiate these services from other financial service delivery methods by offering more tangible advantages, such as faster access to financial information, enhanced technical criteria for decision-making, and improved financial support for beneficiaries.
Capital Structure
Seyed Alireza Hossieni,; Hasan Valiyan; Mohammadreza Abdoli; Maryam Shahri
Abstract
The purpose of this research is the startup accounting development field’s framework and appraisal in the context of capital market companies. This study is exploratory in terms of the type of objective, and it is considered mixed in terms of the type of data collection. In order to measure the ...
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The purpose of this research is the startup accounting development field’s framework and appraisal in the context of capital market companies. This study is exploratory in terms of the type of objective, and it is considered mixed in terms of the type of data collection. In order to measure the reliability of the identified dimensions, the fuzzy Delphi process was used to examine the confirmed axes from the phase of the fuzzy Delphi analysis, based on pairwise comparison in the quantitative section through the Micmac matrix. The results of this study in the qualitative part, during 13 interviews, identified four categories, 8 components, and 41 themes of the concept and developed them in the form of a multidimensional theoretical framework. In the quantitative section, it was also determined that the effectiveness of the "G_1" educational field strengthening dimension is higher than the other examined dimensions, and this dimension was selected as the most central factor in the development of startup accounting in the context of capital market companies. IntroductionFinancial startups are considered one of the most emerging ways of managing financial resources and accounting of the third generation. While accelerating the liquidity circulation cycle in industries, they also possess higher competitive capacities to leverage the advantages of financial markets. However, the importance of the development of startups is not necessarily tied to their novelty or uniqueness in driving competitive business dynamics, but rather to their ability to provide financial services at lower costs, with greater speed and universality at the financial market level, meeting the needs of beneficiaries. This can gain legitimacy for companies through their financial and accounting functions. Literature ReviewOne of the most exemplary business models is startups, which are often created as small and flexible units within organizational structures, or as start-up businesses in the form of small and medium-sized companies through innovative plans, they consistently aim to provide goods and new services that are competitive in the market. Therefore, startups can be defined in two ways. On the one hand, startups can be described as companies with the goal of achieving rapid growth in a specific market or situation. On the other hand, startups can be considered human institutions designed to create new products or services under uncertain conditions. Accordingly, startups should be considered a valuable resource for generating new knowledge, which has gradually transformed into innovation with the development of entrepreneurial infrastructure, as they leverage emerging technologies to invent new products and business models. MethodologyThis study is considered exploratory in terms of its goal within the methodology because it uses the analysis of foundational data theory based on Glazer's approach to identify the background procedures of accounting development for the implementation of financial startups in the context of capital market companies. In terms of the study’s results, it is developmental because the phenomena investigated lack theoretical coherence and an integrated content framework in the study’s context. Regarding the type of data, this study should be considered mixed. In the qualitative part, using foundational data theory and conducting interviews, the effective background procedures for the development of accounting for the implementation of financial startups are identified in the form of a theoretical framework, ensuring the reliability of the identified dimensions through Delphi analysis. In the quantitative part of this study, using the MicMak matrix, an attempt is made to identify the most central area of startup accounting development in the context of capital market companies by comparing the criteria in the row " " and the column " ". ResultIn the qualitative part, through the approach of analyzing foundational data theory and conducting interviews with experts, a total of 41 conceptual themes; 8 components, and 4 categories were identified during the three stages of open, central, and selective coding. Based on this, a theoretical, multidimensional framework was developed, focusing on key axes effective in the development of startup accounting. Subsequently, the reliability of the axes identified through the foundational data theory was measured by performing a fuzzy Delphi analysis. The results indicate the confirmation of all dimensions within the analysis threshold of 0.7. DiscussionIn the following, the axes identified through the Micmac matrix were compared in pairs between the positive pole "+ve" and the negative pole "-ve" to determine the level of influence of row "i" on column "i" or vice versa. The results of the placement of the 8 confirmed axes in the 4 quadrants of the Micmac matrix are significant. Based on this analysis, it was determined that the two dimensions of strengthening the ecosystem fields "G5" and strengthening the educational fields "G1" respectively have a higher level of influence and effectiveness than the other dimensions.The results indicate that capital market companies, to advance their goals of implementing start-up accounting procedures, should focus on strengthening the skill capacities of accountants to effectively use these types of software platforms, based on structural needs assessments.
Accounting tools
Mohsen Borzouzadeh Zavareh; Mohammad Reza Nikbakht
Abstract
This article aims to evaluate the performance of staff at the National Treasury following the implementation of an electronic fund request system. This evaluation is conducted using the Balanced Scorecard approach. The research methodology employed is descriptive and applied in nature. The study’s ...
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This article aims to evaluate the performance of staff at the National Treasury following the implementation of an electronic fund request system. This evaluation is conducted using the Balanced Scorecard approach. The research methodology employed is descriptive and applied in nature. The study’s statistical population comprises 53 experts, auditors, and managers from the National Treasury, working at the Ministry of Economic Affairs and Finance. This group also includes the implementers and specialists of the electronic fund request system. The validity of the questionnaires was determined using content validity, and reliability was established with a Cronbach’s alpha coefficient of 0.883. The study’s findings suggest that the performance of National Treasury staff, post-implementation of the electronic fund request system, is satisfactory when viewed through the lens of the Balanced Scorecard. The key criterion for evaluating the performance of National Treasury staff is empowerment, with an average rank of 3.25.
Introduction
Success in the implementation of electronic government in any country requires a model tailored to the goals, requirements, and conditions of that country. Therefore, a lack of proper planning can lead to neglecting needs and failure in achieving the goals. However, planning alone is not enough to guide and evaluate the performance of companies in an era where creating value and generating wealth through investment in customers, suppliers, employees, processes, technology, and innovation is essential.
Research question:
Is the performance of the employees of the General Treasury Department optimal from the perspectives of financial, customers, internal processes, and growth and learning dimensions of the Balanced Scorecard after the implementation of the electronic fund request system?
Literature review
The Balanced Scorecard presents a framework for articulating strategies aimed at generating value for an organization’s stakeholders, including shareholders, customers, and citizens. Over the years, the Balanced Scorecard has evolved significantly. It began as a performance evaluation tool in 1990, featuring performance dimensions, strategic objectives, key indicators, and performance-related rewards. By 1996, it had transformed into a new management system, emphasizing organizational learning, the identification of operational issues, feedback for future planning, and fostering organizational knowledge, along with the introduction of the PDCA management cycle. In 2001, it was presented as a framework for facilitating change.
Methodology
Drawing upon the models scrutinized in the research trajectory and theoretical underpinnings, this study evaluates employee performance within the country’s General Treasury. It employs the Balanced Scorecard approach and uses the Treasury as a case study to formulate the research model. This research is applied in nature, utilizing the cognitive and informational context provided by foundational research to address needs. The aim of applied research is to devise solutions for operational issues, and its results should be implementable. Furthermore, in terms of its nature and methodology, this research is descriptive (survey research). The objective of conducting descriptive research is to depict the tangible and actual characteristics of a subject or phenomenon. The questionnaire’s validity was confirmed by a group of university experts and professors, and its reliability was affirmed using Cronbach’s alpha coefficient (α=0.883). Following the distribution, collection, and analysis of information, a consensus was reached among experts to position the criteria within each of the four dimensions of the BSC.
Result
Upon collection and extraction, the questionnaires were processed using SPSS statistical software for analysis. Descriptive statistics were utilized, including frequency, frequency percentage, mean, and standard deviation.
Discussion
This study uses the one-sample t-test for analyzing and measuring the questions. To identify which scale of the Balanced Scorecard approach is prioritized, the Friedman test was utilized. Furthermore, to determine which micro-variable of the Balanced Scorecard approach’s scales received the highest score, the mean and, more specifically, descriptive charts were used.
In this regard, we discuss the 4 main research questions.
First question:
According to the one-sample t-test, since the significance level (sig) is 0.005, which is less than the standard level of 0.05, and given that the t-test value is reported as 2.944, which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.39, which is 0.39 higher than the population mean (3).
Second question:
Considering the one-sample t-test, since the significance level (sig) is 0.0001 and this value is less than the standard level of 0.05, and given that the t-test value is reported as 6.606 which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.58, which is 0.58 higher than the population mean (3).
Third question:
Since the significance level (sig) is 0.0001 and this value is less than the standard level of 0.05, and given that the t-test value is reported as 4.261, which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.37, which is 0.37 higher than the population mean (3). Therefore, it can be generally concluded that after the implementation of the Electronic Fund Request System, from the internal processes perspective (except for the two dimensions of binding instructions and lack of focus), the performance of the employees of the General Treasury is satisfactory.
Fourth question:
Considering the one-sample t-test, since the significance level (sig) is 0.0001 and this value is less than the standard level of 0.05, and given that the t-test value is reported as 5.137, which is greater than the standard level of 1.96, zero does not fall within the upper and lower limits. Considering the descriptive statistics of the t-test, the acquired mean in the sample is reported as 3.47, which is 0.47 higher than the population mean (3). Therefore, it can be generally concluded that after the implementation of the Electronic Fund Request System, from the growth and learning perspective (empowerment, culture and values, satisfaction with the work environment, quality of training courses, and satisfaction with professionalism), the performance of the employees of the General Treasury is satisfactory.
Conclusion
The findings of the study indicated that empowerment, with an average rank of 3.25, secured the highest rank and was of significant importance. Subsequently, culture and values, quality of training courses, job satisfaction, and satisfaction with the work environment were also deemed important. This research provided a holistic view of the performance of the employees of the General Treasury, rather than focusing on just one aspect of performance. In essence, alongside financial measures, aspects such as customer experiences, employee growth, and process improvement and efficiency were also taken into account.
Accounting tools
Zahra Jafari; Rahim Bonabi Ghadim; Rasoul Abdi
Abstract
The purpose of this research is the evaluation of effective criteria for the desirability of financial stability integration based on the comparison of metaheuristic algorithms in banks listed on the Tehran Stock Exchange. Initially, through a systematic content screening process, the effective criteria ...
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The purpose of this research is the evaluation of effective criteria for the desirability of financial stability integration based on the comparison of metaheuristic algorithms in banks listed on the Tehran Stock Exchange. Initially, through a systematic content screening process, the effective criteria for the desirability of financial stability integration are used to evaluate banks listed on the Tehran Stock Exchange. Then, relying on two algorithms of Particle Swarm Optimization and Gray Wolf, the study reveals that both innovative algorithms used in this study have the necessary capability to determine the desirability of the financial stability of banks listed on the Tehran Stock Exchange.Metaheuristic Algorithms, Financial Stability Integration, The Desirability of Banks' Efficiency. IntroductionOne of the most important changes in the economic systems of societies is the increasing focus on the functions of financial stability in the banking systems of countries, which has been increasingly taken into account in macroeconomic policies. It is important to note that, due to reasons such as international sanctions, the banking system in developing countries faces many challenges, including disruptions in the banking system and financial exchanges as a result of the reduced foreign trade. This can lead to increased financial costs and risks, reduce public trust in the banking system, diminish international interactions with foreign banks, and disrupt the economic balance. The purpose of this research is the evaluation of effective criteria for the desirability of financial stability integration based on the comparison of metaheuristic algorithms in banks listed on the Tehran Stock Exchange. Literature ReviewFinancial stability in the banking system is defined as a low level of vulnerability to possible risks, which creates a level of balance and stability in banking systems through the ability to resist economic challenges. Elsa et al. (2018) also considered the financial stability of banks as a basis for economic growth functions in a definition and stated that a dynamic banking system needs to control the risks and costs of commercial transactions in a balanced economy to achieve stable financial stability. On the other hand, Verma and Chakarwarty (2023) suggested that if financial stability does not govern the banking systems of countries and they do not have the necessary efficiency, the optimal direction of resources to industries faces a serious challenge, and this issue can affect the country's economic growth in a short period. MethodologyThis study employs a combined and applied methodology. Initially, through a systematic content screening process, the effective criteria for the desirability of financial stability integration are used to evaluate banks listed on the Tehran Stock Exchange. Then, relying on the two algorithms of Particle Swarm Optimization and Gray Wolf and extracting data related to the criteria identified between 2017 and 2018, efforts are made to determine the optimal point of desirability of financial stability integration for banks listed on the Tehran Stock Exchange. In this process, based on the expansion of the mathematical equations of each metaheuristic algorithm and the command codes of the MATLAB software, necessary actions are taken to answer the research questions. ResultThe results showed that both innovative algorithms used in this study have the necessary capability to determine the desirability of the financial stability of banks listed on the Tehran Stock Exchange. However, based on the Wilcoxon Signed-Rank Test coefficients, the Gray Wolf algorithm is more accurate than the Particle Swarm Optimization algorithm for predicting the function of the identified criteria in determining the desirability of financial stability of banks listed on the Tehran Stock Exchange. The results after executing command processes in MATLAB software indicated that both algorithms have the necessary capability to determine the desirability of the financial stability of banks admitted to the Tehran Stock Exchange. However, based on the coefficients of the Wilcoxon test, the Gray Wolf algorithm has a higher accuracy than the Particle Swarm Optimization algorithm for predicting the performance of the identified criteria in determining the desirability of the financial stability of accepted banks. It is also found that the most effective criterion in strengthening the determination of the desirability of financial stability of banks is the liquidity circulation "ϑ3" in the Gray Wolf algorithm. DiscussionIt is also found that the most effective criterion in strengthening the determination of the desirability of banks' financial stability is the Turnover Ratio in the Gray Wolf algorithm. The coefficients obtained in the Gray Wolf algorithm indicate a more effective optimization of effective criteria in determining the financial desirability of the country's banking system. This issue provides an explanation for the interpretation that banks can benefit from this algorithm for financial planning and covering their weaknesses in preserving resources even in the risky conditions of today's economy. ConclusionThe results show that the banks whose total value of transactions in the capital market is higher than the average value of their total shares over a certain period have higher capacities for liquidity circulation. Furthermore, in providing banking services in current and investment matters in competitive projects, these banks have the upper hand compared to other banks. The existence of such added value of shares in the capital market can be considered as contributing to higher returns and lower risk for investing in these banks. Therefore, as the basics of determining the comparative evaluation between algorithms, i.e., the constant return to scale (CRS) and the variable return to scale (VRS) showed banks with higher liquidity circulation and relying on the Gray Wolf algorithm reach the optimal point faster. This finding illustrates the flexibility of financial resources in timely allocation to the market and industries, which can bring higher returns for their shareholders in the long run.
Accounting tools
Mehri Bakhteyari; Javad Rezazadeh; kumars Biglar
Abstract
The implementation of the engagement quality control review (EQCR) by the engagement quality control reviewer has been considered as one of the key elements of quality control in the auditing standards and its implementation is required in the audit of companies listed on the stock exchange. In this ...
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The implementation of the engagement quality control review (EQCR) by the engagement quality control reviewer has been considered as one of the key elements of quality control in the auditing standards and its implementation is required in the audit of companies listed on the stock exchange. In this research, the data were collected through (1) conducting interviews with 25 partners of Iranian auditing firms in the spring and summer of 2023 and (2) the opinions of 12 certified accountants that were published in a newspaper or professional journals in the form of a conversation, round table, notes or articles. Then, by applying the grounded theory, the components that are the obstacles to the effective application of EQCR are identified and presented in the form of a conceptual system model. The validity of the research model was confirmed by 7 audit partners. The findings from the analysis of research data show that there are various obstacles in its different dimensions, the most important of which are: the structure and organization of some audit firm, the small size of many audit firms, economic considerations, low fees of Iranian audit firms, lack of qualified auditors, moral issues in the society, the society's specific problems, governing laws and regulations, weaknesses in quality grading of audit firms, inadequate communication with international professional communities, low awareness of auditing and lack of development, and low application of technology in Iranian audit firms. Considering that the international auditing standard 220 has been updated and includes more requirements for the EQCR, along with the findings of this research showing that the quality control standard is not effectively implemented by Iranian audit firms, some suggestions are given to fill these gaps.IntroductionThe objective of a firm is to design, implement, and operate a system of quality control for audit, review of financial statements, or other assurance or related services engagements performed by a firm, that provides the firm with reasonable assurance that: (a) The firm and its personnel fulfill their responsibilities in accordance with professional standards and applicable legal and regulatory requirements, and conduct engagements in accordance with such standards and requirements; and (b) Engagement reports issued by the firm or engagement partners are appropriate in the circumstances. According to the auditing standards, engagement quality review is an objective evaluation of the significant judgments made by the engagement team and the conclusions reached thereon, performed by the engagement quality reviewer and completed on or before the date of the engagement report. Engagement quality reviewer is a partner, other individual in the firm, or an external individual, appointed by the firm to perform the engagement quality review (IAASB, 2020). Surveys show that engagement quality control review, as one of the key elements of quality control, has not been established in Iranian audit firms. Its causes have not been clarified in previous research. Therefore, in this research, we seek to clarify its causes and obstacles.Research Question(s)What are the obstacles of applying engagement quality control review in Iranian audit firms?Literature ReviewEngagement quality control review is one of the key elements of the quality control system of auditing firms, which is considered in the auditing standards. The literature review shows that this issue has not been studied in Iran. However, some Iranian certified public accountants and audit firm partners have pointed out some obstacles of implementing quality control reviews in the form of notes and roundtables published in professional journals. The Public Company Accounting Oversight Board has described the key issues of quality control review in the United States in 2023 in a report entitled " SPOTLIGHT: Inspection Observations Related to Engagement Quality Reviews". This report shows that there are still many concerns about the quality control review (PCAOB, 2023).MethodologyConsidering the nature of the research problem, which is subjective and relies on the experience of audit institution partners, the application of a qualitative research approach is deemed appropriate. Additionally, since no specific theory has elucidated this phenomenon and there has been no prior research in this area, the use of grounded theory is fitting. Conducting interviews is one of the main methods of data collection in grounded theory (Strauss & Corbin,1990). Therefore, research data have been collected through interviews. Interviews were conducted with 25 partners of audit firms in the spring and summer of 2023. It is noteworthy that in grounded theory, all information is considered as data (Danai Fred et al., 2013). Hence, discussions, roundtables or articles published by 12 Iranian certified public accountants in professional journals or newspapers were also used as data. In the qualitative method of research, unlike the quantitative approach, statistical sampling is not important and sampling is judgmental. That is, people who have the most experience and involvement with the studied phenomenon are selected. Interviews with participants continue until theoretical saturation is reached, meaning that new participants do not introduce new insights beyond what has already been discussed.The interviews are then transcribed, and conceptual tags are attached to each sentence or paragraph of the text. In grounded theory, data analysis is done in three stages: open coding, axial coding, and selective coding. In this research, three methods were used to analyze the data.ResultsAfter conducting the research and data analysis, it is found that there are various obstacles in various dimensions for the application of quality control in Iranian audit firms. These obstacles were extracted in the form of conceptual tags. Based on selective coding, they were classified into different categories. To provide a comprehensible presentation of the barriers, these conceptual labels were categorized and presented in the form of inputs, processes, outputs, consequences, and contextual factors. Presenting these conceptual labels of obstacles in different dimensions helps us to have an accurate picture of the causes and obstacles so that we can adopt strategies to solve them. Some of the most important obstacles are: the structure and organization of some audit firms, the small size of many audit firms, economic considerations, low fees of Iranian audit firms, lack of qualified auditors, moral issues in the society, the society's specific problems, governing laws and regulations, weaknesses in quality grading of audit firms, inadequate communication with international professional communities, low awareness of auditing, and lack of development, and low application of technology in Iranian audit firms.DiscussionIn this research, after analyzing the data, many obstacles are extracted in various dimensions. These factors limit the effective implementation of engagement quality control review as one of the key elements of the audit quality control system. With these conditions, achieving audit quality becomes challenging.ConclusionIn this research, the obstacles to the application of quality control review in Iranian audit firms were examined. The findings show that there are many obstacles in different dimensions. The structure and organization of some audit firm, the small size of many audit firms, economic considerations, low fees of Iranian audit firms, lack of qualified auditors, moral issues in the society, the society's specific problems, governing laws and regulations, weaknesses in quality grading of audit firms, inadequate communication with international professional communities, low awareness of auditing and lack of development, and low application of technology in Iranian audit firms are the main obstacles to the application of engagement quality control review in Iranian audit firms. If these obstacles are not removed, the audit quality of Iranian audit firms will be affected. Additionally, in the present circumstances, it cannot be assured that professional standards will be fully followed. This research is the first Iranian research that has studied this issue and can be an avenue for future research. Future research could study other stakeholders or rank these obstacles. Furthermore, conducting similar research in the future will clarify the extent to which these obstacles can be overcome. The findings of this research can provide a clear perspective on engagement quality control review in Iranian audit firms and its obstacles to regulators, such as the Iranian Association of Certified Public Accountants (IACPA). One suggestion arising from the findings could be to increase the weight of the scores related to the engagement quality control review. Another suggestion would be to promote and clarify the benefits of engagement quality control review for audit firms. The last suggestion is the training of competent quality control reviewers by the AICPA or other educational and professional centers.AcknowledgmentsWe acknowledge the participants in this research who helped us.
Accounting tools
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.