Empirical Studies in Financial Accounting

Abstract The Role of Stock Liquidity on the Relationship Between Executive Internal Debt and Stock Price Efficiency





1. INTRODUCTIO

Stock prices are efficient when information about a stock is released quickly and the information affects stock prices at the same speed. One of the factors affecting the efficiency of stock prices and capital markets is managerial incentives, which significantly affect the investment decisions of companies. In this way, CEOs with higher internal assets (such as company stocks or stock options) are more likely to adopt conservative corporate policies with lower risk, because their personal interests are aligned with the sustainability of the company. This approach leads to greater transparency in information disclosure, which improves the flow of information to the market and increases the efficiency of stock prices. Pensions with defined benefits and deferred compensation are known in financial economics as “internal debt”. Therefore, CEO internal debt is important because it accounts for a significant portion of CEO compensation. (Huang et al, 2022) On the other hand, greater stock liquidity reduces asymmetric information in the market and leads to improved information production. Stock liquidity can increase stock price efficiency by encouraging and stimulating market participants to obtain confidential information about the company (Baharmoghaddam et al., 2015). By paying bonuses, CEOs find more motivation for high performance and more effort to shape the information environment of companies in order to improve stock liquidity. The present study is the first domestic study that examines the relationship between executive internal debt and stock price efficiency by considering the moderating role of stock liquidity on this relationship.



2. MATERIALS AND METHOD

The present study is in the field of positive research and is of the applied type in terms of classification based on the purpose, in terms of nature it is considered as descriptive research and in terms of method it is considered as correlational research. To collect data and information, the library method was used for research literature and in the research data section, reference was made to financial statements, explanatory notes and the monthly magazine of the Stock Exchange. Descriptive and inferential statistics were used to describe and summarize the collected data. In order to analyze the data, first, pre-tests of variance heterogeneity, F-limer test, Hausman test and then to confirm and reject the research hypothesis, multivariate regression test was used using Eviews software. The statistical population of the research includes companies listed on the Tehran Stock Exchange in the period between 1397 and 1403, and based on the systematic exclusion method, 147 companies were selected as the statistical sample of the research to test the statistical hypothesis. Following the research of Huang et al, 2022), the first and second hypotheses of the research are estimated as follows: Hypothesis 1: Internal debt of the executive director affects stock price efficiency. Hypothesis 2: Stock liquidity has a moderating role on the relationship between internal debt of the executive director and stock price efficiency.

3.RESULTS AND DISCUSSI

For the first hypothesis of the research, the probability of the t-statistic for the constant coefficient and the coefficients of the variables of internal debt of the executive director, company size, return on assets, market value to book value of shares, research and development expenses, operating cash flow, dividends paid, capital expenditures, financial recession and advertising on stock price efficiency is less than 5%; therefore, the above relationship is statistically significant. The variable of internal debt of the executive director is negative and significant on stock price efficiency. For the second hypothesis of the research, the probability of the t-statistic for the constant coefficient and internal debt of the executive director, stock liquidity, stock liquidity in interaction with internal debt of the executive director, company size, return on assets, market value to book value of shares, research and development expenses, operating cash flow, dividends paid, capital expenditures, financial recession and advertising on stock price efficiency is less than 5%; therefore, the above relationship is statistically significant. The variables of internal debt of the executive director and stock liquidity in the interaction with internal debt of the executive director on stock price efficiency are equal to (-0.00081 and 0.00011) and are significant, respectively. The absolute value of the coefficient of the stock liquidity variable in the interaction with internal debt of the executive director on stock price efficiency is less than the internal debt of the executive director on stock price efficiency, therefore, the coefficient of the stock liquidity variable has a moderating role on the relationship between the internal debt of the executive director on stock price efficiency.



4. CONCLUSION

The findings of the study in relation to the first hypothesis showed that the internal debt of the CEO has a significant and inverse effect on the efficiency of stock prices. In this regard, it can be argued that CEOs with internal debt, by focusing on a more conservative capital allocation strategy, due to the reduction of executive pensions, are less likely to engage in excessive risk-taking and debtor expropriation and pay more attention to the quality of reporting and reducing the costs of financial misreporting. In fact, CEOs with more internal debt should pay more attention to the company's risk and the costs of financial misreporting that arise in the long run. This can improve the quality of reporting and increase investment efficiency and accurate stock pricing, because high-quality financial reporting can improve investment efficiency and accurate stock pricing by preventing undervaluation and overvaluation. The findings of the second hypothesis also showed that stock liquidity has a moderating role on the relationship between internal executive debt and stock price efficiency, which indicates the intensity of the significant and inverse effect of internal executive debt on stock price efficiency in the light of stock liquidity. In relation to the second hypothesis, it is argued that greater stock liquidity reduces asymmetric information in the market and leads to improved information production. Since investors and financial analysts have more information about companies with higher stock liquidity, their stock prices become more efficient. According to the results of the first hypothesis, it is recommended that companies, with the help of managerial incentives, reform and improve their financial system so that they can quickly provide their financial information to stakeholders. These reforms in the managerial dimension can include improving the pension determination system; deferred benefits and bonuses for managers; It is also recommended that the board of directors of companies increase the preparations for improving price efficiency and reduce the cost of capital by regulating internal debts. According to the results of the second hypothesis, it is suggested to increase derivatives because the development of futures and options to increase liquidity will moderate the negative relationship between managerial debt and price efficiency. It is also recommended to amend the disclosure regulations by requiring the disclosure of details of managers' debt in quarterly reports, along with liquidity indicators, to the Stock Exchange Organization and the Audit Organization as legislative authorities in the field of financial reporting.

Abstract Abstract

Focusing on competitive strategies is one of the key factors in creating sustainable advantages and increasing firms’ value. Among these, conditional conservatism, as a qualitative characteristic of financial reporting, can influence investors’ perceptions of a company’s performance. The purpose of this study is to examine the moderating effect of conditional conservatism on the relation between competitive strategies (differentiation and cost leadership) and firms’ value. This research is applied in nature and employs a quantitative approach. The statistical population includes companies listed on the Tehran Stock Exchange during the years 2016 to 2023. To test the hypotheses, multivariate regression models and panel data methods were used. The results show that the differentiation strategy has a positive and significant relationship with firms’ value. Conditional conservatism has a negative relationship with firm's value, as it leads to lower recognition of accounting earnings and consequently increases market value. Furthermore, conditional conservatism intensifies the negative effect of differentiation strategy on firm's value. In contrast, the cost leadership strategy has a positive and significant relationship with firm's value, and conditional conservatism strengthens this relationship. The findings suggest that alignment between competitive strategies and the level of conservatism in financial reporting can influence the market’s perception of firm performance and ultimately affect the firm’s value.

Keywords: Conditional conservatism, differentiation strategy, cost leadership strategy, Firms’ value.

1. Introduction

Focusing on competitive strategies is one of the essential factors in creating sustainable advantage, increasing productivity, and enhancing the value of companies' shares. In the turbulent environment of the capital market, companies' strategic decisions must be aligned with the characteristics of financial reporting in order to maintain investor confidence. On the other hand, conditional conservatism, as one of the qualitative characteristics of financial reporting, can affect how investors perceive a company's performance by identifying losses more quickly than profits. This study aims to investigate the moderating role of conditional conservatism in the relationship between competitive strategies (including differentiation and cost leadership) and companies' share value. The results of this study can help to more accurately explain the interaction between strategic management decisions and financial reporting policies in creating value for shareholders.



Research hypotheses

The first hypothesis is that differentiation strategy has a negative and significant relationship with the company's value.

The second hypothesis is that conditional conservatism has a negative and significant relationship with the company's value.

The third hypothesis is that conditional conservatism has a negative and significant effect on the relationship between differentiation strategy and the company's value.

The fourth hypothesis is that cost leadership strategy has a positive and significant relationship with the company's value.

The fifth hypothesis is that conditional conservatism has a positive and significant effect on the relationship between cost leadership strategy and the company's value.

2. Literature Review and Hypothesis Development

In companies with more conservative accounting policies, financial information tends to understate the actual profitability of differentiated activities. This can lead to reduced investor confidence in the effectiveness of the differentiation strategy, especially in markets where financial analysts play an important role in the formation of market value (Ahmed & Duellman, 2007; Obiedallah & El Mahdy, 2025). The reduction in reported profits due to conditional conservatism may cause the market to underestimate the performance of companies with a high differentiation strategy and, as a result, their value is lower than that of similar companies with less conservative reporting policies (Talawa, 2024; Luo, 2025).

Finally, it can be concluded that conditional conservatism, despite its role in improving the reliability of financial reporting, may have a negative effect on the market value of the company in the context of a differentiation strategy. Since conservatism prevents the full reflection of the benefits of innovation and differentiation in financial statements, investors will not be able to fully understand the strategic value of the company. Therefore, conditional conservatism is expected to weaken the relationship between differentiation strategy and company value by moderating this relationship and having a significant negative effect on it (Wu et al., 2025; Obiedallah & El Mahdy, 2025).

Companies that observe conditional conservatism have a lower cost of capital by reducing information asymmetry (Ball, Kothari, & Nikolaev, 2013; Basu, 1997). This can help companies with a cost leadership strategy to attract cheaper financing sources and, as a result, reduce the cost of capital, strengthening the positive impact of this strategy on firm's value (Watts, 2003; Hill & Jones, 2012).

As a result, conditional conservatism strengthens and makes the relationship between cost leadership strategy and firm's value more sustainable by increasing transparency, reducing information risk, and improving investor confidence.

3. Methodology

The present study is of an applied type and has been conducted with a quantitative approach. The statistical population includes companies listed on the Tehran Stock Exchange during the years 2016 to 2023. The required data were extracted from financial statements and market information and analyzed using multivariate regression models and panel data methods. In these models, the direct effect of competitive strategies and conditional conservatism as well as their interactive effect on the value of companies were examined.

4. Results

Findings: The results show that the differentiation strategy has a positive and significant relationship with firms’ value. Conditional conservatism has a negative relationship with firm's value, as it leads to lower recognition of accounting earnings and consequently increases market value. Furthermore, conditional conservatism intensifies the negative effect of differentiation strategy on firm's value. In contrast, the cost leadership strategy has a positive and significant relationship with firm's value, and conditional conservatism strengthens this relationship. The findings suggest that alignment between competitive strategies and the level of conservatism in financial reporting can influence the market’s perception of firm performance and ultimately affect the firm’s value.

5. Conclusion

Conclusion: Overall, the results indicate that conditional conservatism plays an important moderating role in the relationship between competitive strategies and firm's value. Conservatism exacerbates the negative effect of differentiation strategy and strengthens the positive effect of cost leadership strategy. From a theoretical perspective, these findings emphasize the importance of aligning accounting policies with the strategic orientations of the firm and, from a practical perspective, provide guidance for managers, accountants, and investors in selecting appropriate strategies and financial reporting practices to maximize the firm's market value.

Abstract 1. Introduction

The present study is necessary for several fundamental reasons and is crucial for a better understanding of capital market dynamics. First, it is essential to have a deeper understanding of the factors influencing auditor change, especially in the face of tax avoidance or financial distress. Auditor change is not simply an administrative move, but can be a strong signal of the financial health and governance of a company. If stakeholders are not aware of why and how companies change their auditors in difficult economic conditions, their interpretation of financial reports and market trends will be seriously ambiguous; therefore, conducting this study is absolutely necessary to empower analysts and investors to interpret these signals more accurately and manage risks better. Also, understanding the moderating role of auditor credibility in this process highlights the need for research that helps assess the quality of financial reporting and ensure its credibility. This study also fills an important gap in the knowledge of this area by focusing on tax avoidance and ownership. The link between ownership type, tax avoidance, and auditor change processes is a topic that has been less addressed, but its importance in assessing corporate transparency and accountability is undeniable.

2. Literature Review

Auditors play an important role in influencing management to change auditors. Each country has regulations regarding changing auditors, but there is still debate about the factors that influence a company's decision to change auditors. Changing auditors can occur for reasons such as resignations, dismissals, or serious disagreements between management and auditors. Companies often use changing auditors to conduct opinion shopping, that is, they seek out auditors who are more lenient in providing opinions on the company's financial statements. Various factors such as corporate tax avoidance and non-disclosure of information in this area, as well as the ownership structure of companies, can have an impact on auditor switching. Auditor switching can be explained using agency theory. Agency theory is a contractual concept that explains the relationship between agents (management) and owners (shareholders). This theory helps to reduce information asymmetry between agents and owners, and as a result, increases information transparency and legitimately protects the rights and interests of owners.

3. Methodology

This research is of an applied nature and, in terms of cognitive approach, has adopted the causal correlation method (post-event) due to the study of events after their occurrence. The statistical population under study included companies listed on the Tehran Stock Exchange over a ten-year period (2015-2024). To achieve more accurate comparability, sampling was conducted using systematic exclusion, and only companies with a fiscal year-end in Esfand and no change in their fiscal year-end date during the study period were accepted. Also, companies active in the banking, insurance, and investment sectors were excluded from the sampling. After applying these filters, 142 companies, including 1420 company-years, were selected as the final sample. For data analysis, the mixed panel data method was used using the Eviews 12 software. Since the main dependent variable (auditor change) is a discrete variable with values of 0 and 1, the final analysis was conducted using logistic regression.

4. Results

The results of testing the hypotheses showed that there is a direct and significant relationship between tax avoidance and auditor switching. However, there is no significant relationship between tax avoidance and institutional ownership. The interaction of auditor credibility with tax avoidance has an inverse and significant effect on auditor switching. In fact, auditor credibility plays a moderating role in the relationship between tax avoidance and auditor switching. However, the interaction of auditor credibility with institutional ownership does not affect auditor switching. In fact, auditor credibility plays a moderating role in the relationship between tax avoidance and auditor switching.

5. Discussion

From a theoretical perspective, firms that adopt aggressive approaches to tax avoidance may seek auditors who are more flexible in their approach to tax ambiguities or less resistant to management’s arguments regarding tax law interpretation. This phenomenon could be due to auditor opinion shopping, where firms seek auditors who are aligned with their interests, especially when the current auditor has expressed disagreement or concerns about the firm’s tax positions. Institutional investors, due to the large volume of their investments and the long-term nature of their interests, are expected to play an active role in monitoring the quality of financial reporting and auditor independence. However, the lack of a direct relationship can mean that decisions about changing auditors fall largely within the purview of the company’s audit committee. High auditor reputation or credibility can reduce the strength of the positive relationship between tax avoidance and auditor switching (according to the first hypothesis); in other words, companies that work with a reputable and reputable auditor may be less inclined to switch auditors, even if they are involved in tax avoidance. The effect of institutional ownership on the decision to change auditor is independent of the auditor's credibility or reputation; in other words, whether the company is audited by a highly reputable auditor or a smaller audit firm, the degree of influence of institutional owners on the decision to change auditor does not change.

6. Conclusion

Auditor switching can be done to conceal the aggressive nature of tax avoidance, reduce the likelihood of detection of tax violations, or even to validate a company's specific tax positions in the eyes of regulatory agencies; therefore, the first hypothesis refers to the mechanisms through which companies may achieve their tax avoidance goals by manipulating their regulatory environment (through auditor switching). Institutional ownership alone is not a direct determinant of auditor turnover, but rather its impact on audit quality may be exerted through the overall strengthening of corporate governance structures rather than through direct interference in operational decisions such as auditor turnover. This result could indicate the relative effectiveness of audit committees in carrying out their oversight functions. Auditor reputation acts as a deterrent (or at least a moderating factor) in the vicious cycle of tax avoidance and auditor switching. Auditors with a high reputation, due to their investment in their brand and fear of losing it, are more likely to maintain independence and professional standards and are less likely to succumb to management pressure to accept ambiguous tax interpretations. Institutional owners may take a more pragmatic approach to auditor change decisions, based on specific auditor performance, rather than relying solely on the auditor's overall reputation. This finding could have implications for audit firm strategies as well as for regulatory bodies.

Abstract In the contemporary global economic landscape, the importance of environmental, social and governance performance has been increasingly recognized due to its profound impact on the firms operations, growth and performance. ESG performance considers non-financial elements such as climate change and corporate ethics, as these non-financial elements can exacerbate or reduce the vulnerability of markets, so ESG performance can affect risk.On the other hand, the implementation and understanding of environmental, social, and governance activities in different types of companies and among different investors can differ significantly and Accordingly, it affects the understanding of systematic risk and how it is managed in financial markets, so it is essential to pay attention to company-specific factors in this context. The aim of the present study is to investigate the effect of environmental, social, and governance performance on the systematic risk of companies by considering the moderating role of company-specific factors. The present study is applied and descriptive in terms of purpose and is based on the regression analysis method. Data from 166 companies listed on the Tehran Stock Exchange were collected during the years 2014 to 2023 and analyzed using econometric models and Eviews software. The results showed that ESG performance has a significant negative effect on systematic risk, meaning that companies with better ESG performance experience lower systematic risk. Also, company size, company age, and market capitalization strengthen the reducing effect of ESG on systematic risk, while the cost of debt can weaken this effect. Better firms performance of companies in the field of ESG improves transparency, enhances their commercial credibility and reputation. The direct result of this is creating a positive image of the company among stakeholders, improving financial and non-financial stability and consequently reducing the firm 's systematic risk. firm -specific factors can moderate this relationship. Accordingly, it is recommended that corporate managers strive to improve their ESG performance to not only reduce risk but also become more attractive to investors. Investors and policymakers can also use these indicators as a tool for risk management and more informed decision-making.. Also, company size, company age, and market capitalization strengthen the reducing effect of ESG on systematic risk, while the cost of debt can weaken this effect. Better firms performance of companies in the field of ESG improves transparency, enhances their commercial credibility and reputation. The direct result of this is creating a positive image of the company among stakeholders, improving financial and non-financial stability and consequently reducing the firm 's systematic risk. firm -specific factors can moderate this relationship. Accordingly, it is recommended that corporate managers strive to improve their ESG performance to not only reduce risk but also become more attractive to investors. Investors and policymakers can also use these indicators as a tool for risk management and more informed decision-making.. Also, company size, company age, and market capitalization strengthen the reducing effect of ESG on systematic risk, while the cost of debt can weaken this effect. Better firms performance of companies in the field of ESG improves transparency, enhances their commercial credibility and reputation. The direct result of this is creating a positive image of the company among stakeholders, improving financial and non-financial stability and consequently reducing the firm 's systematic risk. firm -specific factors can moderate this relationship. Accordingly, it is recommended that corporate managers strive to improve their ESG performance to not only reduce risk but also become more attractive to investors. Investors and policymakers can also use these indicators as a tool for risk management and more informed decision-making.. Also, company size, company age, and market capitalization strengthen the reducing effect of ESG on systematic risk, while the cost of debt can weaken this effect. Better firms performance of companies in the field of ESG improves transparency, enhances their commercial credibility and reputation. The direct result of this is creating a positive image of the company among stakeholders, improving financial and non-financial stability and consequently reducing the firm 's systematic risk. firm -specific factors can moderate this relationship. Accordingly, it is recommended that corporate managers strive to improve their ESG performance to not only reduce risk but also become more attractive to investors. Investors and policymakers can also use these indicators as a tool for risk management and more informed decision-making.

Abstract Trade credit serves as an accessible financing tool, particularly for firms facing financial constraints. This study aimed to examine the effect of financial constraints on the relationship between strategic deviation and trade credit. The research was applied in purpose and descriptive–correlational in design, and the data were analyzed using regression techniques. The statistical population included 124 firms listed on the Tehran Stock Exchange between 2016 and 2024, yielding 1,116 firm-year observations. The findings indicated a positive and significant relationship between strategic deviation and the use of trade credit, which was stronger among firms with severe financial constraints and under high bankruptcy risk, but weaker in firms with more stable financial conditions. Multiple sensitivity analyses, including alternative measures of the independent variable, exclusion of control variables, removal of year and industry effects, and testing the model with a moderating variable across groups with varying financial constraints, consistently confirmed the main results. Overall, the results showed that strategic deviation directly influenced corporate credit policies, with greater deviation increasing reliance on trade credit, and that financial constraints could moderate this relationship.
 

Introduction

Strategic deviation within firms refers to a substantial divergence from the prevailing norms, conventions, and competitive practices of a given industry. Such deviation is not limited to superficial differences in tactics but reflects a deeper commitment to pursuing distinct strategic orientations and allocating organizational resources in unconventional ways. In many contexts, including emerging economies, these deviations are often driven by firms’ attempts to achieve differentiation, create innovative products and services, and ultimately secure new and more sustainable competitive advantages. By deliberately distancing themselves from industry routines, firms seek to overcome competitive inertia, foster innovation, and position themselves as leaders rather than followers. However, these benefits are rarely cost-neutral. Departures from industry norms typically require additional and sometimes substantial financial commitments to support experimentation, innovation, and higher levels of risk-taking. Therefore, the financing dimension of strategic deviation becomes critical, as firms must secure adequate resources to sustain their unconventional strategies. The purpose of this study is to examine whether and how strategic deviation influences firms’ reliance on trade credit as a substitute or a complementary financing source. Specifically, the research investigates whether firms that deviate more strongly from industry norms and resource allocation patterns exhibit higher usage of trade credit, and how this relationship is conditioned by the severity of financial constraints.

Literature Review

In Iran’s economic and financial environment, the financing aspect of strategic deviation takes on particular significance. The country’s capital markets remain underdeveloped relative to those of advanced economies, and bank loans constitute the dominant and often sole source of external financing for most firms. Yet access to bank credit is limited and frequently subject to strict conditions imposed by lending institutions, the financial condition of the borrowing firm, and broader macroeconomic constraints. For many corporations, these restrictions create persistent financing challenges that constrain their ability to sustain growth and implement innovative strategies. Within this context, trade credit—defined as credit extended by suppliers in the form of deferred payments—emerges as an essential alternative financing mechanism.
Trade credit is not only flexible and relational but also less dependent on collateral compared to formal bank loans, making it particularly valuable for firms facing financial constraints. Consequently, understanding how strategic deviation interacts with firms’ reliance on trade credit is an important question in both strategic management and corporate finance, particularly in emerging economies such as Iran.

Methodology

This study is applied in purpose and descriptive–correlational in method, drawing on an empirical sample of 124 non-financial firms listed on the Tehran Stock Exchange over the period 2016–2024, yielding 1,116 firm-year observations. To test the hypotheses, regression analysis techniques were employed, with trade credit measured through two widely accepted proxies: (i) the ratio of accounts payable to the cost of goods sold, and (ii) the ratio of accounts payable to total sales. Strategic deviation was operationalized through six indicators reflecting firms’ allocation of resources and financial structures: the ratio of net fixed assets to gross fixed assets, the inventory-to-sales ratio, the selling, general, and administrative expenses-to-sales ratio, the debt-to-equity ratio, the advertising expenditures-to-sales ratio, and the R&D expenditures-to-sales ratio. These variables capture multiple dimensions of deviation, from production intensity to marketing orientation and financial leverage. To ensure methodological robustness, principal component analysis (PCA) was applied to these six variables, producing a composite index of strategic deviation used in sensitivity analyses. This approach reduces multicollinearity and provides a more comprehensive representation of deviation patterns.

Results and Discussion

The empirical findings consistently demonstrate a positive and statistically significant relationship between strategic deviation and the use of trade credit. Firms that pursue greater deviation from industry conventions are more likely to depend on trade credit financing, suggesting that suppliers play a critical role in enabling unconventional strategies. Moreover, the relationship between deviation and trade credit is moderated by financial conditions: the association is stronger for firms experiencing severe financial constraints or operating under heightened bankruptcy risk, whereas the relationship weakens for firms in stronger financial positions or operating within the “safe zone.” These results indicate that trade credit serves as a crucial financing mechanism precisely when firms need it most—under conditions of resource scarcity and elevated risk. Robustness checks further reinforce these findings. The results remain consistent across multiple sensitivity analyses, including alternative measures of strategic deviation, the exclusion of control variables, the omission of year and industry fixed effects, and re-estimation across subsamples classified by financial constraints. Across all these tests, the central conclusion—that strategic deviation encourages greater reliance on trade credit—remains stable.

Conclusion

Taken together, the findings contribute several important insights. First, they highlight the pivotal role of strategic deviation in shaping short-term financing policies, particularly in environments where bank financing is limited. Second, the results underscore the substitutive role of trade credit, which allows strategically deviant firms to overcome financial barriers and continue pursuing innovation. Third, the study provides evidence from an emerging economy that broadens existing theoretical discussions in strategic management and corporate finance, which have largely been developed in advanced markets. From a managerial perspective, the findings suggest that managers of firms adopting non-traditional strategies should explicitly incorporate trade credit into their financing portfolios as a deliberate component of resource planning. Doing so not only sustains their strategic initiatives but also enhances resilience against financial shocks. From a policy-making perspective, the results highlight the need for supportive institutional frameworks that reduce structural barriers in supplier credit markets, enabling innovative firms to thrive. Ultimately, this study advances the literature by bridging strategic management and finance perspectives. It demonstrates that strategic deviation, while a driver of competitive differentiation, simultaneously creates financing challenges that can be mitigated through reliance on trade credit. By integrating insights on strategy, finance, and institutional context, the research offers a comprehensive view of how firms in emerging markets manage the tension between innovation and resource constraints.
 

Abstract The present study seeks to present a paradigmatic framework from causes to consequences to develop the phenomenon of breaking the governance entrenchments of capital market companies. The methodological nature of this study is mixed, according to which, in implementing the analytical objectives of the study, an attempt was first made through the Strauss and Corbin (1998) approach in grounded theory to identify the dimensions that can be seen in the five dimensions of the paradigmatic model through interviews and three-stage coding. The research findings in the qualitative section were derived from 12 interviews, indicated the identification of 60 propositional themes during open coding, 12 components during axial coding, and 6 structural categories during selective coding, which ultimately resulted in the presentation of the research paradigmatic model. Moreover, in the quantitative part of the present study, the research findings confirmed the generalizability of the dimensions derived from the qualitative part to the quantitative part through fitting the structural suitability of the PLS wrap in the partial least squares process.

Introduction

Corporate governance in financial market structures is known as a mechanism for protecting shareholder rights, and its most important function is often to ensure effective and transparent company performance by determining long-term strategies and macro-goals, which can greatly reduce the potential risks of violating stakeholder rights by monitoring the performance of executive managers and complying with laws and regulations. Therefore, according to the definition of the Organization for Economic Cooperation and Development (OECD), the governance system includes a set of procedures and processes according to which companies should be directed and controlled in such a way that, by distributing specific limits of authority and responsibilities to appointed managers, the possibility of managerial unaccountability is reduced and the level of competitive legitimacy of companies is increasingly strengthened. Therefore, the most important fundamental principles of corporate governance in financial markets can be sought in ensuring effective observance of shareholder rights, preventing ownership opportunism, making decisions regarding the ratio of share distribution between general shareholders and institutional shareholders, combining the structure of the board of directors from the perspective of maintaining independence and effectiveness of monitoring fair decisions, and improving the quality of information disclosure for greater transparency, thereby reducing agency costs in these markets.

Methodology

The present study should be placed, first of all, from the perspective of its purpose, among exploratory research, which, due to the novel nature of the "staggered board structuring" in the context of theoretical approaches to the capital market, does not have sufficient cognitive coherence. Therefore, this study, through the tool of interviewing experts, seeks to understand the causal aspects of the consequences of the development of the aforementioned pivotal phenomenon with the aim of breaking the corporate governance entrenchment in the field of market companies, which, due to the greater level of functional transparency in institutional supervision, makes it possible to achieve higher competitive advantages in a more sustainable manner.
In terms of the objective approach in methodology, this study should be considered as developmental research. This is because, while there are few studies focused on this phenomenon, there are no reliable foundations for a correct understanding of the structuring of the staggered board of directors, at least at the present time, and this study seeks to provide a paradigmatic model for a more coherent development of this concept in the context of capital market companies.
Finally, from the perspective of data type, the present study should be considered mixed, which, through inductive-deductive philosophical foundations, seeks to expand the areas of structuring the board of directors of Pelkan in the form of an initial abstract model to break the possibilities based on the entrenchments of the corporate governance system in the context of the capital market, so that in the quantitative part, it can be possible to evaluate the dimensions arising from the paradigmatic model based on generalization to the context of the study.
Accordingly, it is possible to implement analytical procedures to achieve the objectives of this study through data analysis based on the Strauss and Corbin (1998) approach, so that aspects related to this phenomenon can be identified and categorized into paradigms through interviews with experts in the field, through three stages of open, axial, and selective coding. Thus, the categorizations resulting from the coding of the interviews can ultimately guide the study to a theoretical framework, so that in the form of a paradigmatic model based on the five dimensions of [causal conditions], [intervening conditions], [contextual conditions], [strategies], and [consequences], it is possible to measure the identified dimensions within the framework of a structural fit of the utility model, according to an analogical approach.

Findings

In this study, an attempt has been made to identify five dimensions of the paradigmatic model: "causal conditions", "interventing conditions", "contextual conditions", "strategic conditions", and "consequences" through a mixed methodological process, first by analyzing grounded theory and the Strauss and Corbin (1998) approach, and then by interviewing experts, through three stages of open, axial, and selective coding. By determining these criteria in the grounded theory process, the research, after measuring the content validity index (CVI) and the test-retest reliability method, proceeded to present the paradigmatic model as a basis for recognizing the necessity of implementing a staggered board of directors in breaking the governance entrenchment at the capital market level. Then, in order for this framework to serve as a strategic roadmap in the Iranian capital market system to help policymakers gain a more significant understanding of the central phenomenon of the study in the corporate governance system, a paradigmatic model was developed through structural equation analysis. The findings, while confirming the number of central components according to the paradigmatic model, provided the possibility of generalizing these criteria to the study context for conducting two exploratory and confirmatory factor analyses. Through these two criteria, the structural fit coefficients were examined, and it was determined that the dimensions identified in the paradigmatic model indicate a suitable ability to be extended to the Iranian capital market.

Conclusion

The present study seeks to present a paradigmatic framework from causes to consequences to develop the phenomenon of breaking the governance entrenchments of capital market companies. The findings show that the phenomenon of staggered board structuring should be described as an obstacle to the governance entrenchments of capital market companies, which have caused corruption and financial distortions in the contemporary capital market due to possible self-interest in the appointment of directors. Therefore, periodic changes in board members based on a review of the comprehensive corporate governance system in the capital market are among the necessities that today contribute to more structured financial transparency in developing countries by adopting such mechanisms, thereby creating a higher level of accountability and, as a result, higher legitimacy of financial markets. These rules help markets become more orderly in protecting the rights of shareholders, investors, and regulators, while reducing the scope for opportunistic behavior by companies that pursue their own interests through strategic appointments in the capital market.

Abstract This study, considering the growing role of managers’ behavioral characteristics in financial decisions and the importance of ownership structure in shaping the consequences of these characteristics, examined the effect of CEO overconfidence on corporate resilience and the moderating role of ownership concentration. The main objective of the study was to test the effect of CEO overconfidence on corporate resilience and to examine the moderating role of ownership concentration in this relationship. The research was applied in nature and, in terms of method, was descriptive–causal based on archival data. The statistical population included companies listed on the Tehran Stock Exchange and Iran Fara Bourse during the years 2015 to 2024, from which, after applying screening criteria, 206 companies, equivalent to 2,060 firm-year observations, were selected as the final sample. Managerial overconfidence was measured using three proxies based on investment patterns and was converted into a composite variable through factor analysis. Ownership concentration was measured based on the percentage of shares held by major shareholders, and resilience was measured using stock price crash severity. The hypotheses were tested using panel data regression models with controls for year and industry effects. The findings showed that managerial overconfidence alone had no significant effect on corporate resilience; however, the interaction effect of ownership concentration and CEO overconfidence was significant. The results indicated that the impact of CEO overconfidence on corporate resilience depended on the level of ownership concentration, and this ownership mechanism could shape the way managerial behavioral consequences manifest.

Introduction

This study examines the effect of CEO overconfidence on corporate resilience with emphasis on the moderating role of ownership concentration in firms listed on the Tehran Stock Exchange and Iran Fara Bourse. The motivation for conducting this research stems from the growing attention paid to managerial behavioral characteristics in corporate finance and strategic decision-making. In recent years, scholars in behavioral finance have increasingly emphasized that managerial traits and psychological biases can influence corporate decisions and ultimately affect firm outcomes. Among these behavioral characteristics, managerial overconfidence has attracted considerable attention because it may influence managers’ perceptions of risk, investment opportunities, and the expected outcomes of strategic decisions. At the same time, corporate governance mechanisms—particularly ownership structure—play an important role in shaping how managerial characteristics translate into organizational outcomes. Ownership concentration, which reflects the extent to which shares are held by large shareholders, can influence monitoring intensity, managerial discretion, and the effectiveness of governance mechanisms. Accordingly, examining the effect of CEO overconfidence on corporate resilience without considering the governance context may provide an incomplete understanding of the phenomenon. Therefore, the present study aims to investigate the effect of CEO overconfidence on corporate resilience and to determine whether ownership concentration moderates this effect in firms listed on the Tehran Stock Exchange and Iran Fara Bourse.

Literature Review

Prior studies indicate that CEO overconfidence can significantly influence corporate investment, financing, and strategic decision-making. Overconfident managers tend to overestimate their ability to generate favorable outcomes and may consequently undertake more aggressive investment strategies or engage in riskier financial decisions. While such behavior may sometimes lead to positive outcomes, it may also expose firms to higher levels of uncertainty and vulnerability. Therefore, managerial overconfidence can potentially affect different dimensions of firm performance and stability, including corporate resilience. Corporate resilience refers to a firm’s capacity to withstand adverse shocks and maintain stability in the face of uncertainty and market fluctuations. From this perspective, managerial decisions influenced by behavioral biases may affect the firm’s vulnerability to negative events and its ability to absorb and recover from such shocks. However, the consequences of managerial overconfidence are not necessarily uniform across all firms. The impact of this behavioral trait may depend on the governance environment in which managerial decisions are made. Ownership concentration, as an important component of corporate governance, can influence the degree of monitoring imposed on managers and the extent of managerial discretion. In firms with higher ownership concentration, major shareholders may exert stronger monitoring and oversight over managerial decisions. Such monitoring may influence how managerial overconfidence translates into corporate outcomes. Consequently, ownership concentration may play a moderating role in shaping the effect of CEO overconfidence on corporate resilience. Based on these theoretical arguments and prior empirical findings, the following hypotheses are proposed:
Hypothesis 1: CEO overconfidence has a significant effect on corporate resilience.
Hypothesis 2: Ownership concentration moderates the relationship between CEO overconfidence and corporate resilience.

Methodology

The study is applied in nature and adopts a descriptive–causal design based on archival data. The statistical population consists of all firms listed on the Tehran Stock Exchange and Iran Fara Bourse during the period 2015–2024. After applying screening criteria, including data availability, a consistent fiscal year-end, and the exclusion of financial institutions, the final sample includes 206 firms, resulting in 2,060 firm-year observations.
CEO overconfidence is measured using three investment-based proxies (OC-V, OC-AS, and OC-CAPEX). To avoid multiple separate estimations and to capture the common variation among these measures, factor analysis is used to construct a composite overconfidence variable. Ownership concentration is measured as the percentage of shares held by major shareholders. Corporate resilience is measured using stock price crash severity. The hypotheses are tested using panel data regression models with year and industry fixed effects. To examine the robustness of the findings, the models are re-estimated using each individual overconfidence proxy separately.

Results

The empirical findings indicate that CEO overconfidence does not have a statistically significant direct effect on corporate resilience. This result suggests that managerial overconfidence alone is not sufficient to explain variations in corporate resilience among the sampled firms. The absence of a significant direct effect was observed both in the main model that uses the composite overconfidence variable and in the robustness tests that rely on individual overconfidence proxies. However, the results also reveal that the interaction term between ownership concentration and CEO overconfidence is statistically positive and significant. This finding indicates that the effect of CEO overconfidence on corporate resilience depends on the level of ownership concentration within the firm. In other words, ownership concentration alters the way in which managerial overconfidence influences corporate resilience. Furthermore, the moderating role of ownership concentration remains generally stable across alternative model specifications, which provides additional support for the robustness of the findings. These results suggest that corporate governance mechanisms—particularly ownership concentration—can shape the consequences of managerial behavioral characteristics.

Conclusion

The findings of this study indicate that CEO overconfidence alone does not significantly explain variations in corporate resilience among firms listed on the Tehran Stock Exchange and Iran Fara Bourse. However, ownership concentration plays a positive and significant moderating role in the effect of CEO overconfidence on corporate resilience. This implies that the governance structure of firms can influence how managerial behavioral characteristics are reflected in corporate outcomes. Overall, the results highlight the importance of considering ownership structure when examining the consequences of managerial behavioral traits. The findings also suggest that the impact of CEO overconfidence on corporate resilience should be interpreted within the broader context of corporate governance mechanisms. These insights contribute to the literature on behavioral corporate finance and corporate governance by emphasizing the role of ownership concentration in shaping the effect of managerial overconfidence on firm resilience in the Iranian capital market

Abstract Block trades, by transferring a significant volume of shares and revealing company-specific information, can influence the price discovery process and market efficiency, thereby affecting the level of information asymmetry among market participants. Accordingly, the aim of the present study is to examine the impact of block trades on information asymmetry, with an emphasis on the moderating role of media coverage. The statistical population of this study consists of companies listed on the Tehran Stock Exchange during the period 2014 to 2024. Using a systematic exclusion method, data related to 100 companies and a total of 19,227 block trades were selected and analyzed. The generalized method of moments (GMM) was employed to test the research hypotheses. The empirical findings indicate that both the number of block trades and the ratio of block trade volume have a positive and significant impact on information asymmetry. Furthermore, the results of the second part of the study reveal that media coverage negatively moderates the relationship between block trades and information asymmetry. In other words, in companies with broader media coverage, the effect of increasing block trading on information asymmetry is weakened. Overall, the inefficient structure of the Iranian capital market, the high concentration of ownership, and the low level of information transparency have caused block trading, by itself, to fail to effectively disseminate company information and reduce information asymmetry. Nevertheless, expanding media coverage and providing timely information about significant company events—including block trades—can enhance market transparency, promote more accurate reflection of firm-specific information in stock prices, and consequently reduce information asymmetry. Introduction Block trading, as one of the significant events in capital markets, has always attracted the attention of financial analysts due to the large volume of shares transferred and its potential to influence prices and liquidity. These transactions can have consequences for market efficiency and information transparency by transferring information and altering the ownership structure of companies. On the other hand, media coverage plays a moderating role in this process by reducing information asymmetry and increasing investor awareness. Accordingly, the present study examines the effect of block trading on information asymmetry, emphasizing the moderating role of media coverage in the Tehran Stock Exchange. The main objective of this research is to analyze the effect of block trading on information asymmetry as one of the outcomes of such transactions and to identify the role of media coverage as a moderating factor. By providing a deeper understanding of how block trading affects the market, this research can assist investors and financial analysts in making more informed decisions. Furthermore, by examining the role of media coverage, it seeks to identify and analyze how public information influences market behavior and investor reactions to block trades. From a theoretical perspective, this study can contribute to the development of existing theories in finance and investor behavior, creating new frameworks for analyzing financial markets. In other words, this research can help establish a new discourse on the relationship between media, large transactions, and market behavior, paving the way for future studies in this field. Methodology In terms of purpose, the present study falls under applied research, as its results can serve as a basis for decision-making by managers, policymakers, and capital market investors. Regarding data type and execution process, this research adopts a quantitative approach and is ex-post-facto in nature. The research data include information from all companies listed on the Tehran Stock Exchange between 2014 and 2024 that conducted at least one block trade. After applying systematic elimination, 100 companies with a total of 19,227 block trades were selected as the final sample. Data analysis was performed using descriptive and inferential statistics and the Generalized Method of Moments (GMM). The tools used include Raah-Avard Novin and Excel for extracting and calculating variables, and Stata for hypothesis testing and result analysis. The validity of the GMM method was examined using Arellano & Bond (1991) tests, including the Sargan test for instruments and the m2 test for second-order serial correlation. Findings This research investigated the effect of block trading on information asymmetry in the Tehran Stock Exchange, considering the moderating role of media coverage. The main findings indicate that the number of block trades and the ratio of block trading volume have a positive and significant impact on information asymmetry. In other words, block trading is associated with increased information asymmetry. Additionally, media coverage negatively moderates the relationship between block trading and information asymmetry; that is, the positive effect of block trading on information asymmetry is weakened in companies with more extensive media coverage. This means that active news coverage, by reducing information asymmetry, diminishes the positive impact of block trading on information asymmetry. This result is attributed to the inefficient structure of Iran's capital market and the need for media coverage to enhance transparency and better reflect company-specific information in stock prices. Conclusion Regarding the level of block trading in Iran and its trends, it can generally be stated that Iran's stock market, unlike other countries, faces challenges due to issues such as inefficiency, high ownership concentration, and lack of transparency in information dissemination. The untimely announcement of positive and negative news and investors' lack of trust in available information prevent the informational content of block trades from being adequately reflected in stock prices. This situation increases access to private information for informed investors, thereby intensifying information asymmetry between informed and uninformed investors. Furthermore, the synergy between normal and block markets helps reduce liquidity shocks and the risk of these stocks. Companies with active block markets have higher liquidity, and their trading volume is greater compared to the normal market. Improved liquidity following block trades contributes to increased market efficiency. In the second part of the research, the conclusion indicates that media coverage has a positive effect on the relationship between block trading and information asymmetry. Companies that have active media coverage and promptly disclose information and objectives of block trades are able to attract new buyers, thereby reducing information asymmetry. The final conclusion is based on the principle that information transparency mechanisms, such as media coverage, play a vital role in optimizing the benefits of block trading for Iran's capital market.    

Abstract This study investigates the effect of earnings per share (EPS) disclosure pressure on the level of environmental information disclosure among companies listed on the Tehran Stock Exchange, with an emphasis on the moderating role of corporate governance. Using data from 110 firms over the period 2012-2023 and employing a panel data approach, the results indicate that pressure to disclose EPS has a significant negative impact on environmental disclosure levels. Meanwhile, corporate governance mechanisms, through enhanced transparency and oversight, can help mitigate this adverse effect. However, the findings reveal that corporate governance has not been fully effective in moderating the negative influence of EPS disclosure pressure on environmental disclosures. These results provide valuable insights for policymakers and corporate managers aiming to strengthen governance frameworks and improve the quality of environmental reporting. Introduction In emerging capital markets, listed firms increasingly operate under dual, and potentially conflicting, pressures: capital market expectations to meet or exceed earnings per share (EPS) benchmarks, and growing stakeholder demands for transparent environmental reporting. While EPS targets sharpen the focus on short-term profitability, they may also create incentives to downplay or delay disclosures that highlight environmental risks and costs. Prior evidence on the relationship between earnings pressure and environmental disclosure is scarce and primarily drawn from developed markets, where regulatory enforcement and governance infrastructures differ markedly from those in developing economies. Against this backdrop, the present study examines whether EPS disclosure pressure reduces the extent of environmental disclosure and explores the potential moderating role of selected corporate governance mechanisms in the context of the Tehran Stock Exchange.   Literature Review The literature on sustainability reporting highlights environmental disclosure as a primary channel through which firms seek legitimacy, respond to regulatory and societal pressures, and communicate long-term strategic commitments. Studies grounded in legitimacy theory suggest that firms expand environmental reporting when facing public scrutiny, whereas agency-based analyses emphasize that managers may strategically withhold or bias such information if it threatens their private benefits. Research on earnings pressure shows that managers under tight EPS targets may engage in real activities management, accrual manipulation, or selective disclosure to maintain a favourable financial narrative, but only a few studies explicitly link EPS-related pressures to non-financial reporting, particularly environmental disclosure. At the same time, corporate governance characteristics, such as institutional ownership, board independence, and CEO tenure, are argued to constrain opportunistic behaviour and enhance transparency, although evidence from emerging markets indicates that governance structures may be less effective where ownership is concentrated, and investor protection is weak. This study extends the literature by integrating these strands into a single framework and providing evidence from an underexplored institutional setting. Methodology The empirical analysis is based on an unbalanced panel of 110 non-financial firms listed on the Tehran Stock Exchange over the period 2012–2024. Environmental disclosure is measured using a six-item checklist applied to annual reports and board of directors’ reports, covering pollution prevention, waste reduction, recycling initiatives, conservation of natural resources, compliance with environmental regulations, and investments in environmentally friendly technologies. The firm-year disclosure index is calculated as the ratio of disclosed items to the total number of items. EPS disclosure pressure is operationalized as a composite index obtained via factor analysis of several proxies that capture both financial dynamics and managerial incentives, including EPS growth pattern and volatility, overinvestment as a proxy for managerial overconfidence, managerial ability scores derived from a data envelopment analysis framework, industry competition measured by a sales-based Herfindahl–Hirschman index, and a market-specific investor sentiment indicator. Corporate governance is captured through a separate factor-based index that combines the presence of institutional blockholders, the proportion of independent directors on the board, and CEO stability, defined as the absence of CEO turnover in the previous two years. Panel regression models with firm and year fixed effects are estimated, controlling for firm size, leverage, profitability, loss status, inventory and receivables intensity, auditor size, audit opinion type, and liquidity. Standard panel-data diagnostics and robust estimation techniques are employed to address multicollinearity, autocorrelation, and heteroskedasticity. Results The regression results show a negative and statistically significant association between EPS disclosure pressure and the level of environmental disclosure, indicating that firms exposed to stronger pressure to maintain favourable EPS figures tend to provide less extensive environmental information. This effect remains robust across alternative specifications and after controlling for firm-specific, industry, and time-varying factors. The composite corporate governance index exhibits a positive and significant relationship with environmental disclosure, suggesting that firms with higher institutional ownership, more independent boards, and more stable executive leadership are generally more inclined to report on environmental issues. However, the interaction term between EPS disclosure pressure and the governance index is not statistically significant, implying that the selected governance mechanisms do not materially mitigate the adverse impact of EPS pressure on environmental disclosure. Additional sensitivity analyses confirm that the main inferences are not driven by outliers, alternative variable definitions, or different estimation approaches. Discussion These findings suggest that, in the examined emerging-market context, environmental disclosure is treated by managers as a discretionary margin that can be curtailed when the pressure to meet EPS expectations intensifies. From a legitimacy-theory perspective, managers appear to prioritize the short-term legitimacy gained from delivering target EPS over the longer-term legitimacy associated with transparent environmental reporting. From an agency-theory viewpoint, the results reflect a misalignment between shareholders’ broader interest in credible sustainability disclosure and managers’ incentives tied to short-term financial performance. The positive direct effect of corporate governance on environmental disclosure indicates that stronger monitoring and oversight can foster more extensive reporting; yet the lack of a significant moderating effect reveals the limitations of these governance arrangements when confronted with intense EPS pressure. In markets characterized by concentrated ownership, evolving regulation, and relatively weak enforcement, formal governance structures may improve average transparency but remain insufficient to prevent managers from sacrificing environmental communication under earnings stress. Conclusion The study contributes to the literature by developing a multidimensional measure of EPS disclosure pressure, focusing specifically on environmental disclosure in an emerging capital market, and assessing the conditional role of corporate governance. The evidence shows that EPS-related pressures systematically undermine environmental transparency, and that conventional governance attributes, while beneficial on average, do not fully counteract this effect. These insights have important policy implications: regulators and standard setters may need to strengthen environmental reporting requirements, refine enforcement mechanisms, and encourage performance evaluation frameworks that balance EPS outcomes with sustainability metrics. Boards and institutional investors should also reconsider compensation and monitoring practices that place excessive weight on short-term earnings targets and pay closer attention to the consistency and completeness of environmental disclosures. Future research could extend this analysis by exploring alternative dimensions of sustainability reporting, employing dynamic panel estimators to better address endogeneity concerns, and conducting cross-country comparisons to examine how institutional differences shape the interplay between earnings pressure, governance, and environmental disclosure.  

Abstract Efficiency is one of the most important criteria that investors consider when evaluating influencing factors to identify suitable investment opportunities. Since managers play an effective role in company decisions, they may deviate from optimal investment choices. Therefore, the purpose of this research is to investigate the relationship between CEO power and overinvestment. In this regard, 123 companies listed on the Tehran Stock Exchange were examined between 2016 and 2022. The results show that there is a negative and significant relationship between CEO power and investment inefficiency (overinvestment). Furthermore, this relationship is not nonlinear. The findings indicate that powerful CEOs do not engage in excessive investments that could create more personal benefits for them. Indeed, because of risk aversion and ability effects, the private benefits of powerful CEOs are aligned with shareholders’ interests, making them less likely to overinvest
Introduction
Efficiency is one of the most important criteria that investors consider when evaluating influencing factors to identify suitable investment opportunities. Since managers play an effective role in company decisions, they may deviate from optimal investment choices. Therefore, the purpose of this research is to investigate the relationship between CEO power and overinvestment. To explain this relationship, three different effects are discussed: the discretion effect, the risk aversion effect, and the ability effect.
Under the discretion effect, CEO power is positively related to overinvestment, because powerful CEOs have more freedom of action and may use overinvestment decisions to create personal benefits. Through empire building and expropriation, they pursue self-interest that can increase their rewards, wealth associated with stock ownership, and job security because they control capital allocation. Furthermore, CEOs can create personal bonuses through overinvestment because they influence the choice of performance measures associated with their bonuses. Under the risk aversion effect, CEO power has a negative relationship with overinvestment, because powerful CEOs are more risk-averse than shareholders who can reduce their risk through diversified portfolios. Overinvestment may increase the risk of the company. Since most of the CEO's rewards and human capital depend on their company, it is difficult for them to diversify work and wealth risks. Therefore, powerful CEOs who do not diversify and are often considered the main planners of the company's long-term strategy are more likely to make investments based on risk aversion. As a result, they are less likely to overinvest. Under the ability effect, powerful CEOs with greater management ability can make investment decisions more effectively and efficiently, and therefore are less likely to overinvest. CEOs with stronger expertise can better manage the company's external uncertainties through their experience and knowledge. Hence, powerful CEOs make more efficient investment decisions. Accordingly, the main goal of this research is to investigate the effect of CEO power on overinvestment. From the perspective of economic studies, weak supervision over CEOs, in the shadow of weak management structures and opportunities to secure personal benefits, can encourage powerful managers to choose projects with a negative net present value (NPV), thereby reducing company value. On the other hand, greater CEO power leads to more appropriate investment in valuable projects and greater investment efficiency. Factors such as risk aversion, motivation to maintain reputation and credibility, and stronger management abilities make powerful managers perform better in evaluating investment opportunities and increase investment efficiency, which aligns with organizational research.

Research Question

According to the research objective, this study seeks to answer the question of whether CEOs with higher decision-making power overinvest.

Methods

The current research is of an applied type; in terms of its goal, it is analytical, quasi-experimental, and correlational. From the time dimension of the data, it is retrospective and post-event. In line with the purpose of the research, 123 companies listed on the Tehran Stock Exchange were examined between 2016 and 2022. The residuals of Richardson's (2006) model were used to measure overinvestment. CEO power was measured using the principal component analysis method and the criteria of CEO duality, the percentage of independent directors on the board of directors, CEO tenure, and CEO ownership percentage. The information required to measure the variables and test the research hypotheses was extracted from the Rahavard Novin database, audited financial statements, and other reports published on company websites, Codal, and the Stock Exchange Organization. After data collection, Excel software was used for summarizing and calculations. Since the dependent variable, overinvestment, is not continuous and has only one of the two values (zero and one), the logistic regression (logit) model was used to test the research hypothesis with this variable. In addition, a multiple regression model was used to test the research hypothesis with the investment inefficiency variable. Finally, the analysis was performed using EViews software.

Results

The results show that as CEO power increases, investment inefficiency (overinvestment) decreases. In addition, there is no significant nonlinear relationship between CEO power and investment inefficiency (overinvestment).

Discussion and Conclusion

The findings of the research show that powerful CEOs, who have more authority than shareholders in making company decisions, do not engage in excessive investments that could create personal benefits for them. Indeed, because of the risk aversion and ability effects, the private benefits of powerful CEOs are naturally aligned with shareholders’ interests, making them less likely to overinvest. Under the risk aversion effect, since most of a CEO's rewards and human capital depend on their company, it is difficult for them to diversify work and wealth risks. Therefore, powerful CEOs who do not diversify and are often considered the main planners of the company's long-term strategy are more likely to make investments based on risk aversion. As a result, they are less likely to overinvest. Under the ability effect, powerful CEOs have higher management abilities and therefore make more efficient investment decisions. Because strong CEOs with greater managerial ability possess better knowledge and judgment than their peers, making them more capable of predicting future changes, they do not waste capital on negative NPV projects. Therefore, more powerful CEOs are less likely to overinvest. These results are in line with Lo and Shiah‑Hou's (2022) research and are also consistent with organizational theory. According to this theory, the greater the power of the CEO, the more appropriate the investment in valuable projects and the greater the investment efficiency. Factors such as managers' risk aversion, motivation to maintain reputation, and stronger management abilities lead powerful managers to use better strategies for the optimal use of company resources, thereby increasing transparency and securing the interests of all stakeholder groups. Therefore, powerful CEOs make more efficient investment decisions.
 
 

Abstract The purpose of this study is to investigate the effect of fixed asset investment and financial performance on the relationship between social responsibility and debt financing. The present study is applied and, from the methodological point of view, is a causal-correlational (post-event) study. The statistical population includes all companies listed on the Tehran Stock Exchange, and using the systematic elimination sampling method, 141 firms were selected as the research sample and studied over a 10-year period between 2014 and 2023. The findings of hypothesis testing showed that there is a direct and significant relationship between social responsibility and debt financing. Investment in fixed assets does not affect this relationship between social responsibility and debt financing, but financial performance has an inverse and significant effect on this relationship. By adhering to social responsibilities and respecting the rights of stakeholders and society, company managers can more easily access external financing by creating a better image. In addition, obtaining a higher social rank can strengthen the company's image for investors and provide greater assurance

Introduction

Companies and economic institutions need appropriate and timely financing to invest, repay debts, and increase working capital. Financial managers are always trying to increase the value of the company by creating new financing methods. Companies do not rely on only one type of resource; they try to use multiple resources to implement their plans and address their needs. Various factors can affect access to debt financing. Corporate social responsibility is one of the important issues that can influence the company's financing process. It is described as the process of creating wealth, promoting the company's competitive advantage, and maximizing the value of wealth and benefits created for society. In general, it reflects the commitment and attention of the business to the quality of life of employees, customers, the local community, and society as a whole, with the aim of developing a sustainable economy.

Literature Review

Debt financing is a more desirable solution for financing due to tax savings and its lower rate compared to the expected returns of shareholders, but what is important for creditors is the company’s repayment ability (Ebrahimi et al., 2019). Organizations should always consider themselves a part of society and have a sense of responsibility towards society. In order to improve public welfare, employees, and related stakeholders, companies should also work beyond their direct interests. A company's social responsibility focuses on important issues such as ethics, environment, security, education, and human rights (Kordestani et al., 2018). Companies with higher social responsibility can, in fact, provide a strong guarantee for debt repayment, ensure the proper functioning of the company, reduce managers' behavioral biases, and ensure the provision of accurate information by managers to the capital market. This can increase companies’ access to financing through debt (Oyar et al., 2024). Therefore, the first hypothesis of the present study is as follows:
H1: Social responsibility affects access to financing through debt.
Financial performance is an objective measure of how effectively an organization has used its assets to generate revenue. It is one of the most important indicators for evaluating its performance and the degree of achievement of predetermined goals (Rahimian et al., 2013). Financial performance reflects the efficiency or inefficiency of the company and can therefore influence the opinions of investors and creditors regarding the company's performance. Accordingly, the second hypothesis of the present study is as follows:
H2: Investment in fixed assets affects the relationship between social responsibility and access to financing through debt.
One of the fundamental variables affecting the future performance of companies, and consequently the return on their shares, is the level of investment in fixed assets. This can pave the way for achieving the desired return in the future. However, since higher investment involves greater risk, it can weaken the company's financial position, reducing its ability to maintain current returns and achieve growth in future periods. In the long run, this can also decrease the company's efficiency and performance (Oyar et al., 2024). Therefore, the third hypothesis of the present study is as follows:
H3: Financial performance affects the relationship between social responsibility and access to financing through debt.

Methodology

The present study is applied and, from a methodological point of view, is causal-correlational (post-event). The statistical population includes all companies listed on the Tehran Stock Exchange, and the study period covers 2014 to 2023. The systematic elimination method was used to determine the sample, and 141 companies were selected as the research sample. Data analysis was carried out using the combined data method and the panel data approach, and Eviews 12 software was applied to test the hypotheses.

Results

The findings from testing the research hypotheses showed that there is a direct and significant relationship between social responsibility and financing through debt. Investment in fixed assets does not affect the relationship between social responsibility and financing through debt, but financial performance has an inverse and significant effect on this relationship. By adhering to social responsibilities and respecting the rights of stakeholders and society, company managers can more easily access external financing by creating a better image. In addition, obtaining a higher social rank can strengthen the company's image for investors and provide greater assurance.

Discussion

The results showed that corporate social responsibility directly affects financing through debt. In fact, when companies adhere to social principles and responsibilities, those who extend credit to the company operate in a more favorable environment for repayment, which simplifies companies’ access to debt financing. One of the fundamental variables affecting the future performance of companies, and consequently the return on their stocks, is the level of investment in fixed assets. Such investment can pave the way for achieving desirable returns in the future, but because of the added risk it places on the company's financial position, higher investment can reduce the company's ability to maintain its current return and achieve growth in future periods. While investing in fixed assets should theoretically affect debt financing because such assets can serve as collateral, the results showed that this feature has no effect on the relationship between social responsibility and debt financing. Financial performance reflects the overall performance of the company and the profitability derived from expenses and assets. It weakens the relationship between social responsibility and debt financing. In fact, it can be interpreted that financial performance influences the relationship between social responsibility and debt financing.

Conclusion

The main limitation of the present study is the lack of a comprehensive and complete index to measure the social responsibility of companies. If the Stock Exchange Organization were to provide a general measure of social responsibility through comprehensive studies, the scope of research in this field would be greatly expanded.

Abstract The aim of this research is to examine the impact of knowledge heterogeneity among board members on the optimistic tone of explanatory reports, as well as to investigate the mediating role of earnings management in this relationship. It is expected that differences in the characteristics of a company’s management team may influence the quality of both quantitative and qualitative financial reporting. To test the research hypotheses, panel data from 125 companies listed on the stock exchange over a 9-year period (2014- 2022) were used. The research models were estimated using multivariate regression analysis. The results show that the heterogeneity of managerial knowledge has a positive and significant effect on the optimistic tone of explanatory reports. Additionally, earnings management also has a positive and significant impact on the tone of explanatory reports. Ultimately, earnings management is shown to mediate the relationship between the heterogeneity of managerial knowledge and the optimistic tone of explanatory reports. The findings offer a new perspective on the role of executive management teams and contribute valuable insights to the literature on the strategic leadership of senior managers and annual board report disclosure.
Introduction
Given the explanatory reports are approved by a company’s senior management team, and the views of board members are communicated to information users, it is likely that differences in the knowledge of senior managers influence the tone of disclosure in these reports. It is expected that variations in the characteristics of a company's management team affect the quality of both financial (quantitative) and explanatory (qualitative) reports. Accordingly, this study investigates the relationship between senior managers' knowledge heterogeneity and the tone of explanatory reports, with a particular focus on the mediating role of earnings management. The importance of this research lies in its aim to raise stakeholder and user awareness of how managerial knowledge influences disclosure tone. It offers empirical evidence highlighting the relationship between managers' knowledge differences and the tone of their explanatory reports. Additionally, the study examines earnings management as a factor influencing this relationship. Since no prior research has specifically explored this topic, this study is the first to assess the impact of knowledge heterogeneity among senior managers on the tone of annual explanatory reports, emphasizing the mediating effect of earnings management. This research contributes to the development of the Iranian accounting literature from several perspectives. It advances the understanding of qualitative financial information, particularly the tone of management disclosures. Furthermore, it employs textual analysis methodology, a systematic and quantitative approach to interpreting communication content and understanding internal managerial attitudes. As this method is still emerging in the field of accounting, the study is also innovative from a methodological standpoint.
According to the main question of the research and the presented theoretical framework, the hypotheses of the research are presented as follows:
H1: The heterogeneity of managers' knowledge affects the tone of explanatory reports.
H2: The heterogeneity of managers' knowledge affects earnings management.
H3: Earnings management affects the tone of explanatory reports.
H4: The heterogeneity of managers' knowledge affects the tone of explanatory reports through the mediating role of earnings management.

2. Methodology

This research is classified as quantitative, applied, and post-event in nature. Data were collected through document mining, using the new Rahavard software, and by reviewing audited financial statements of companies listed on the Tehran Stock Exchange. The statistical population consists of all companies listed on the Tehran Stock Exchange during the study period from 2014 to 2022. Companies meeting the following criteria were selected as the research sample:

Their financial year ends in March, to ensure data comparability.
They did not change their financial reporting period during the 9-year study window.
Complete data for all variables used in this research were available.
They are not banks, insurance companies, or investment companies.

Based on these criteria, 125 companies were selected as the final sample. To test the research hypotheses, multivariate regression models were employed using the panel data method. All data were analyzed using Stata statistical software.

3. Results and Discussion

The findings related to the first hypothesis indicate that heterogeneity in managers' knowledge significantly influences the optimistic tone of management's explanatory reports. In other words, the greater the knowledge diversity among managers, the more frequently a positive tone is used in annual reports. This may be attributed to such managers being more risk-averse; concerned about the company’s future, they may attempt to present conditions in a more favorable light to stakeholders. This heterogeneity in managerial knowledge can lead to the presentation of an overly favorable or distorted image of the company’s situation to information users. The results of the second hypothesis show that knowledge heterogeneity among managers also has a significant positive effect on earnings management. That is, as the diversity in knowledge among managers increases, the likelihood of engaging in earnings management also rises. These results are consistent with the contractual incentives (reward) of managers. The findings of the third hypothesis of the study indicate that earnings management has a positive and significant effect on the tone of annual explanatory reports. This means that the lower the quality of financial reporting in companies, the more positive words managers use in their annual reports. In other words, managers seek to hide their possible undesirable performance by distorting users’ perceptions. This finding aligns with the opportunistic theory of managers. The findings of the fourth hypothesis indicate that earnings management can play a mediating role in the relationship between the differentiation of managers' knowledge and the tone of annual explanatory reports. This means that earnings management significantly reflects the effect of managers' knowledge heterogeneity on the tone of financial reports. This issue highlights the self-interest of such managers, who seek to reduce users’ ability to analyze information by disclosing it in an unrealistic manner.

4. Conclusion

The results of the present research, while offering a new perspective on the role of the executive management team within companies, provide useful insights that enrich the existing literature on the strategic leadership role of senior managers and the disclosure of annual board reports. These findings contribute to optimizing the structure of senior management teams and can help companies make better decisions to improve overall performance.

Abstract Numerous studies have investigated the relationship between systematic risk and a wide range of accounting and financial variables. However, most empirical studies have adopted the classical regression method, which entails limitations such as a restricted number of variables to preserve degrees of freedom. To overcome this constraint, the present study employs the Bayesian Model Averaging (BMA) method. Using data from 55 companies listed on the Tehran Stock Exchange between 2010 and 2023, this study examines the influence of 58 different financial and accounting variables on the systematic risk of these companies. The research aims to identify the key variables that significantly contribute to systematic risk. The findings reveal that among the examined variables, company size has the strongest impact on systematic risk, with a positive coefficient. In second and third place, asset turnover and operational efficiency demonstrate significant effects, with the former exhibiting a positive coefficient and the latter a negative coefficient. The fourth influential variable is the ratio of long-term debt-to-equity, showing a positive coefficient. Lastly, the ratio of a company's market value to the book value of its total assets is identified as the fifth influential variable, exerting a negative impact on systematic risk.
 

Introduction

Understanding the drivers of systematic risk is crucial for investors seeking to optimize their portfolios and for companies aiming to develop robust risk management strategies. While many studies have explored the relationship between systematic risk and various accounting and financial variables, the majority have used classical regression methods, which tend to focus on a limited number of factors. This limitation often overlooks the complex interplay among variables that could better explain systematic risk. Given the growing need for more accurate models in the face of financial market volatility, this study adopts the Bayesian Model Averaging (BMA) approach to assess the impact of a wider range of accounting and financial variables on systematic risk. The research seeks to answer the following questions:
Research Question(s)
- Which accounting and financial variables most significantly influence the systematic risk of companies listed on the Tehran Stock Exchange?
-Do the selected variables have a positive or negative impact on systematic risk, and how do these effects vary across different industries and financial contexts?
2- Literature Review
Systematic risk, commonly measured by the beta coefficient, represents the portion of a company’s risk that cannot be diversified away. Previous studies have highlighted several accounting and financial factors, including company size, financial leverage, operational efficiency, and asset turnover, as important determinants of systematic risk (Figure 1). However, the results across studies are mixed, and traditional models often fail to account for the complex interactions among variables. Additionally, several studies have noted that the method of variable selection and estimation can significantly influence the conclusions drawn about risk determinants. The literature suggests that large firms tend to have higher systematic risk due to greater exposure to market and economic cycles, while smaller firms may experience lower risk due to reduced exposure to such fluctuations. Other studies have explored the roles of profitability, debt ratios, liquidity, and asset management in determining market risk, but there is no consensus on which variables are most influential.
 
Figure1- Fundamental Factors Affecting Systematic Risk
Source: Brimble & Hodgson (2007)
 
3- Methodology
This study employs the BMA technique to assess the impact of 58 potential accounting and financial variables on systematic risk. The BMA approach is particularly well-suited to this context because it enables the simultaneous consideration of multiple models, allowing for a more comprehensive understanding of the relationships between variables and risk. The study uses data from 55 companies listed on the Tehran Stock Exchange, covering the period from 2010 to 2023. The sample includes companies from a range of sectors, ensuring that the findings are not limited to any one industry. Data were collected from financial statements and reports available on the official website of the Tehran Stock Exchange (TSETMC), and the BMA method was implemented using Stata 18 software. The estimation process includes backward sampling, in which weak models are sequentially excluded and the best models are selected based on their posterior probability of explaining the data.
4- Results
The results of the BMA analysis indicate that several variables have a significant impact on systematic risk

Company Size: Company size has the strongest effect on systematic risk, with a positive coefficient, indicating that larger companies generally face higher systematic risk.
Asset Turnover: The asset turnover ratio, which measures how efficiently a company uses its assets to generate revenue, also has a positive effect on systematic risk.
Operational Efficiency: Companies with higher operational efficiency exhibit lower systematic risk, as indicated by the negative coefficient for operational efficiency.
Long-Term Debt-to-Equity Ratio: A positive relationship is found between the long-term debt-to-equity ratio and systematic risk, suggesting that companies with higher leverage tend to experience greater exposure to market risk.
Market Value to Book Value Ratio: This ratio has a negative effect on systematic risk, indicating that companies with higher market valuations relative to their book values are less sensitive to market fluctuations.

These variables were identified as the most significant based on their posterior inclusion probabilities (PIP), with company size having the highest PIP of 0.8143, indicating it is the most important determinant of systematic risk.
5- Discussion
The findings suggest that company size plays a pivotal role in determining systematic risk. Larger companies tend to be more exposed to broader economic fluctuations and market cycles, which can lead to higher systematic risk. Asset turnover, though generally considered a measure of operational efficiency, also contributes positively to risk, potentially due to the increased exposure of firms with higher asset turnover to volatile markets. Operational efficiency, on the other hand, shows a negative relationship with systematic risk, supporting the notion that companies with better control over their operations are more resilient to market shocks. This finding is consistent with the literature suggesting that operational efficiency can mitigate the impact of external risks. Similarly, the positive relationship between the long-term debt-to-equity ratio and systematic risk aligns with prior studies that highlight the role of financial leverage in amplifying market risk. Finally, the negative relationship with the market value to book value ratio indicates that investors view companies with higher market valuations as more stable, potentially because these companies are perceived as less vulnerable to market downturns.
6- Conclusion
This study contributes to the understanding of the determinants of systematic risk by employing the BMA approach, which overcomes limitations inherent in traditional regression models. The results highlight that company size, asset turnover, operational efficiency, the long-term debt-to-equity ratio, and the market value to book value ratio are the key factors influencing systematic risk. These findings have practical implications for investors and corporate managers seeking to mitigate exposure to market risk. Companies, especially larger ones, can benefit from enhancing operational efficiency and optimizing their financial structures to reduce systematic risk. Future research could explore the interaction between these variables across different sectors and market conditions, and further refine models by incorporating additional macroeconomic factors.

Abstract This study investigates the spillover effects in the disclosure timing of financial statements among peer firms, taking into account the deadlines stipulated by the Executive Regulations on Information Disclosure for registered firms under the Securities and Exchange Organization. The findings reveal the presence of peer effects in the disclosure timing of pre-audited interim and annual financial statements, as a result of peer competition to attract market attention and mimicry in disclosure behavior. In contrast, no spillover effect is observed in the disclosure timing of the audited financial statement. Furthermore, the results provide insights into competition for market attention among peer firms when releasing semi-annual audited financial statements for clients audited by non-private audit firms (i.e., the Audit Organization and Mofid Rahbar Institute). This suggests a potential value-added role of non-private audit firms in enhancing the credibility of interim audited financial statements. The presence of a spillover effect in unaudited disclosures, contrasted with its absence in audited disclosures, may be attributed to the higher costs of accelerating the release of audited financial statements and the strategic timing of unaudited disclosures to elicit a desired market response.

Introduction and Theoretical Background

Financial disclosure is a critical component of corporate transparency, influencing investor decisions, regulatory oversight, and market efficiency. While prior research has extensively examined the content of financial disclosures, the timing of these disclosures remains an underexplored aspect of corporate strategy. Firms face a trade-off between timely disclosure, which may offer a competitive advantage, and the associated costs, including compliance requirements and managerial discretion.
A growing body of literature suggests that firms do not make disclosure decisions in isolation but are influenced by the behavior of their peers. The concept of peer effects posits that firms within the same industry observe and often mimic the timing strategies of their competitors. This imitation may be driven by a desire to manage investor perceptions, respond to competitive pressures, or align with industry norms.
The theoretical foundation of this study is rooted in signaling theory and the theory of strategic disclosure. According to signaling theory, firms disclose financial information strategically to convey positive signals to investors and differentiate themselves from competitors. Strategic disclosure theory further asserts that firms adjust their disclosure practices in response to market conditions and the actions of their peers, aiming to maximize market attention and investor confidence.
Additionally, research on financial market efficiency suggests that early disclosures receive more market attention than later ones, creating incentives for firms to strategically time the release of their financial statements. Firms that delay disclosures risk negative investor sentiment or diminished market responsiveness. Consequently, understanding the peer-driven dynamics of disclosure timing provides valuable insights into how firms navigate regulatory constraints and competitive pressures.
This study aims to fill a gap in the existing literature by examining whether firms align their financial disclosure timing with that of their industry peers, and how this behavior differs between audited and unaudited financial statements. By analyzing disclosure patterns over an extended period, this research sheds light on the broader implications of peer effects in corporate financial communication.

Research Methodology

This study employs a quantitative research design using archival financial data from 242 firms listed on the Tehran Stock Exchange between 2011 and 2022. The analysis is conducted through econometric modeling to measure the relationship between the disclosure timing of focal firms and that of their industry peers. Key variables include the timing of audited and unaudited financial statement disclosures, firm size, leverage, and auditor type. A regression model is used to assess whether firms adjust their disclosure timing based on peer behavior, while controlling for industry and firm-specific factors.

Results and Findings

The empirical findings suggest a strong peer effect in the timing of unaudited financial statements, where firms tend to align their disclosure timing with competitors to attract market attention. This pattern is particularly evident among firms with high market visibility, indicating that competitive pressures influence disclosure timing decisions.
However, no significant peer effects are observed in the timing of audited financial statements. This may be attributed to stringent regulatory requirements and the involvement of independent auditors, which limit managerial discretion in disclosure timing. Additionally, firms audited by government-affiliated audit firms demonstrate greater synchronization in their disclosure timing, highlighting the potential influence of audit firm reputation on disclosure strategies.
Another notable finding is that firms competing for market attention tend to accelerate their disclosure timing to differentiate themselves from peers. The results indicate that firms operating in highly competitive industries are more likely to engage in strategic disclosure timing to gain a competitive advantage in capital markets.
Furthermore, the study finds that firms with larger market capitalization and higher leverage ratios tend to experience longer disclosure delays, reflecting the complexity of financial reporting processes in such firms. These findings support the hypothesis that firms strategically manage disclosure timing based on industry competition and firm-specific characteristics.

Conclusion

This study provides empirical evidence that firms engage in strategic disclosure timing influenced by peer behavior. While unaudited financial statements exhibit a strong contagion effect, audited statements do not follow the same pattern, likely due to higher associated costs and regulatory constraints. The findings suggest that firms actively monitor their peers' disclosure practices and adjust their own timing decisions to maximize market attention.
From a regulatory perspective, these results highlight the need for policies that consider the competitive dynamics of disclosure timing. Understanding peer-driven disclosure behaviors can help regulators refine disclosure rules to enhance market transparency and prevent firms from manipulating disclosure timing for competitive advantages.
The implications of this study extend to both investors and corporate managers. Investors should be aware of the strategic motivations behind disclosure timing, while managers should consider the potential reputational risks associated with delaying financial disclosures. Future research could explore the effects of industry-specific regulations and investor reactions on disclosure timing strategies, as well as the long-term consequences of disclosure timing for firm valuation and market efficiency.
 

Abstract Assets are crucial for companies' current and future decisions, significantly influencing investors' perceptions. This study investigates the relationship between accounting asset informativeness and investors' beliefs, with a focus on the impact of accounting earnings quality. A sample of 249 companies listed on the Tehran Stock Exchange between 2013 and 2023 was selected for analysis. The results indicate that increased asset informativeness positively influences investors' beliefs at both the aggregate and discretionary levels. However, asset informativeness related to inherent factors does not impact investors' beliefs. Furthermore, low earnings quality does not weaken the relationship between asset informativeness at the aggregate level and discretionary factors with investors' beliefs.

Introduction

Investors' beliefs and expectations play a crucial role in their decision-making process and behavior. Assets are a key factor in a company's present and future decisions, significantly influencing investors' confidence. Accounting assets help reduce uncertainty about a share's true value and shape people's expectations of the company. In other words, they contain valuable information, reflecting high accounting asset informativeness. Notably, accounting asset informativeness is distinct from earnings indicators. As a result, low earnings quality does not affect investors' beliefs due to the presence of accounting asset informativeness. Therefore, earnings quality may not influence the correlation between accounting asset informativeness and investors' beliefs. Based on this, the research aims to explore the connection between accounting asset informativeness and investors' beliefs, with a focus on the influence of accounting earnings quality. The researchers propose two hypotheses: Accounting asset informativeness positively impacts investors' beliefs, and earnings quality does not moderate the influence of accounting asset informativeness on investors' beliefs.

Methodology

This study focuses on applied research. Accounting asset informativeness is the independent variable, calculated using the explanatory power of the regression of a company's net operating assets on its operating earnings. A 10-year rolling regression was conducted separately for each company. Investors' beliefs were the dependent variable, and the earnings quality served as the moderating variable. Earnings quality was determined based on four criteria: earnings stability, earnings smoothing, accruals quality, and the relationship between earnings and value. The study included a sample of 249 companies listed on the Tehran Stock Exchange, spanning from 2013 to 2023.

Results

The information provided by accounting assets has a positive impact on investors' beliefs at both the aggregate and discretionary levels. However, this information does not affect investors' beliefs when it comes to intrinsic factors. Additionally, low earnings quality does not weaken the relationship between accounting asset information at the aggregate level and discretionary factors with investors' beliefs.

Discussion

According to neoclassical investment theory, changes in a company's market value reflect investors' assessments of its intrinsic value based on available information. Therefore, the informativeness of a company's accounting assets can affect its stock performance. When a company's capital stock is inaccurately measured by its accounting assets, changes in market value will have a greater impact than changes in accounting assets. On the other hand, when accounting assets are measured with less error, they provide more accurate information about the company's resources. Investors use this information to estimate the market value of a company's stock and form expectations about its intrinsic value. If accounting asset informativeness is strong, investors rely on asset information to analyze the intrinsic value of the stock. It seems that even if the quality of earnings is weak, it does not significantly impact investors' decision-making. Therefore, low earnings quality cannot disrupt the relationship between accounting asset informativeness and shareholders' expectations.

Conclusion

Based on the findings, investors and financial statement users should consider asset informativeness when determining the true value of a share. It is important to note that financial statement information is not limited to profit and loss but also includes the measurement of assets on the balance sheet.
Creditors should not focus solely on profit and loss in their debt agreement; they should also consider the company's assets as a result of its current and future decisions. It is recommended that standard setters use asset informativeness to evaluate the effects of policy changes and balance sheet asset measurement changes to improve the implementation of accounting standards.
Analysts should consider asset informativeness as a fundamental factor during analysis, especially when earnings quality is low. Additionally, company managers and planners should specify the purpose of obtaining operational assets and the capacity of those assets during financial reporting to attract the attention of investors and creditors.
 

Abstract Working capital management is crucial for business growth and survival as it maximizes enterprise value and shareholder wealth, thereby maintaining competitive conditions and optimal performance. This study identified and explained accounting variables determining operational efficiency (OE) of the companies listed on the Tehran Stock Exchange (TSE), Iran, in light of working capital items. The statistical population consisted of all companies, and the samples were 112 cases listed during 2016-2020. Utilizing an applied, descriptive-correlational research design, the relationship between the variables was then established. The dependent variable was OE, evaluated using data envelopment analysis (DEA); and the independent ones were working capital items and dividend growth rate. To investigate the effect of the independent variables on the dependent one, eight hypotheses were formulated, and multivariate linear regression with panel data in a fixed-effects model was implemented. Testing the hypotheses at a 95% confidence interval demonstrated that average period of collection of claims, average debt repayment period, dividend growth ratio, cash holding level, and liquidity ratio have a significant positive effect on OE. Nevertheless, the cash conversion cycle, and average inventory turnover period have negative impacts. Managers are thus suggested to identify working capital items and exploit them along with short/long-term goals in companies. This is practical in evaluating financial flexibility and solvency, facilitating optimal liquidity, and increasing business profitability and performance. Furthermore, learning about such items is helpful to investors, creditors, and analysts to make optimal decisions.
 

Introduction

Working capital management in companies plays a key role in their growth and survival. This business process also helps increase the value of such entities and maximize their shareholder wealth, thereby maintaining competitive conditions and optimal performance. Representing the management of current resources and expenses in a company, working capital management has two components, namely, the management of current assets and liabilities, whose balance is of utmost importance. Decisions made about each one can affect the other (Jahan Khani & Talebi, 1999). On the word of Nath et al. (2010), working capital items have a critical role in the operational efficiency (OE) of a company as well as its marketing capability. In this line, Fang et al. (2008) also believe that working capital items have high liquidity, and are directly associated with the operating results and efficiency of a company, so managing cash in the short term is especially relevant for competition in markets. Therefore, the main items in working capital can significantly shape the operating results in a company, including contribution margin, market share, and OE. Against this background, the present study is to identify and explain the accounting variables determining the OE of the companies listed on the Tehran Stock Exchange (TSE), Iran, in light of the working capital items.

Materials & Methods

Considering the type of supervision and the degree of control, this study is categorized as field research, because the variables were investigated in their natural state. With regard to the data collection method, this study is placed into documentary research. Utilizing an applied, descriptive research design, the relationship between the given variables was established via a correlational study. The statistical population comprised the companies listed on the TSE, Iran, and the study samples included 112 cases listed during 2016-2020. The dependent variable was OE, evaluated using data envelopment analysis (DEA), and the independent variables were working capital items and dividend growth rate. Profitability index, company size, financial leverage, and operating cash flow (OCF) were correspondingly deemed as the control variables in the research model. To shed light on the effect of the independent variables on the dependent one, eight hypotheses were initially formulated, and then multivariate linear regression using panel data in a fixed-effects model was implemented to test them. In order to analyze the data and interpret the results, descriptive and inferential statistics were ultimately utilized.

Findings

Upon presenting the descriptive statistics and checking the assumptions of the regression as well as determining themost suitable research model, the linear regression equation was estimated using the fixed-effects model, as described  
in table 1

Discussion & Conclusion

As confirmed by the study findings, working capital items can explain the OE of the companies listed on the TSE, Iran. In this respect, the results of testing the main research hypothesis are consistent with the reports by Sun et al. (2020) and Nath et al. (2010). The outcomes of testing the secondary hypotheses also reveal a significant positive relationship between the variables of average period of collection of claims, average debt repayment period, dividend growth ratio, cash holding level, and liquidity ratio and the variable of operational efficiency. Nevertheless, there is a significant negative relationship between the variables of cash conversion cycle and average inventory turnover period and operational efficiency.
Considering these results, cash holding level and liquidity ratio have a positive effect on operational efficiency, which supports the findings in Nath et al. (2010). According to Nath et al. (2010), working capital items with high liquidity help improve the OE of a company, indicating its high capability to manage cash in the short term, as a requirement for its competitive presence in markets. The study results also agree with those concluded by Afrifa et al. (2022) that holding more cash facilitates working capital efficiency. Based on the study findings, average inventory turnover period has a negative effect on OE, in harmony with the results in Deloof (2003) that high inventory level declines the profitability and performance of a company. In his opinion, managers can increase the profitability and performance of businesses by reducing inventory levels. In view of the cash conversion cycle in the given companies during the study period here, the relationship between this variable and OE is negative, which is consistent with the results in Abdulla et al. (2017) that companies with higher cash conversion cycle are more efficient in managing their working capital as compared with other entities.
From this perspective, managers are suggested to identify the role of working capital items and exploit them in line with the short/long-term goals in companies. This is practical in evaluating financial flexibility and solvency, and facilitates achieving optimal liquidity, and subsequently increasing business profitability and performance. Furthermore, learning about the role of working capital items is of assistance to investors, creditors, and analysts to make optimal decisions. Furthermore, it is possible to carry out the same study in the future with respect to the size and type of industry of the companies listed on the TSE, Iran, and complete a comparative study regarding the companies operating in each industry. Besides, it is recommended to analyze the effect of various working capital strategies on economic added value in a separate study. Investigating the effect of various strategies and components of working capital on stock price and its fluctuations should also be the subject of further research.