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Empirical Studies in Financial Accounting is an open-access, double-blind, peer-reviewed journal published by Allameh Tabataba’i University, the leading university in Humanities and Social Sciences in Iran. Studies the Empirical Studies in Financial Accountinghas been established to provide an intellectual platform for national and international researchers working Empirical Studies in Financial Accounting. The Journal was founded in as a response to quick advancements in Empirical Studies in Financial Accounting and was dedicated to the publication of highest-quality research studies that report findings on issues of great concern to the profession of New Media Studies.

To allow for easy and worldwide access to the most updated research findings, the journal is set to be an open-access journal. 

The journal charges two million Rials to compensate a part of the arbitration fee, and if the article is accepted, additionally four million Rials will be charged from the authors for a part of the costs of processing the articles, the rest of the costs will be financially supported by Allameh Tabatabai University.

Non-Iranian authors are free of mentioned charges.

The journal is published in both a print version and an online version.

Financial Accounting

Earnings Management via Classification Shifting and Stock Price Crash Risk

Pages 1-41

https://doi.org/10.22054/qjma.2026.91667.2762

Mozaffar Jamalianpour, Mndana Taheri, Mahdi Nikravesh, Shirin Khoshnam

Abstract This study examines the effect of classification shifting earnings management on stock price crash risk. Classification shifting involves reclassifying operating expenses as non-operating items, thereby inflating operating income without affecting net income. As a relatively low-cost earnings management technique, it may enable managers to conceal bad news and increase the likelihood of stock price crashes. The research sample consists of financial data from 129 firms listed on the Tehran Stock Exchange over the period 2012–2023 (1391–1402 in the Iranian calendar). Stock price crash risk was measured using two indicators: negative conditional skewness of stock returns and down-to-up volatility. The results indicate that classification shifting is negatively and significantly associated with stock price crash risk. Furthermore, a greater gap between operating income and net income weakens this negative relationship. The study also recognizes that examining only the direct relationship between classification shifting and stock price crash risk is insufficient, as theoretical and empirical evidence suggests that the effects of earnings management on market reactions depend considerably on firms’ information environments and financial conditions. Accordingly, several moderating variables were incorporated to provide a deeper understanding of the mechanisms underlying this relationship. The results show that cash flow volatility and information asymmetry have positive effects on stock price crash risk and weaken the main relationship only when crash risk is measured using negative conditional skewness. In contrast, capital structure, measured by financial leverage, has no statistically significant moderating effect.
Introduction
Earnings management is a common practice in accounting and finance through which managers exercise discretion over financial reporting to influence the way stakeholders perceive a firm’s financial performance. Although some earnings management practices may help managers communicate information about a firm’s underlying economic conditions, opportunistic practices can reduce financial reporting transparency and mislead investors. One potential consequence of opportunistic earnings management is stock price crash risk, which refers to the likelihood of an abrupt and substantial decline in a firm’s stock price. Stock price crashes may occur when managers conceal unfavorable information over time and allow negative news to accumulate until it is eventually released to the market.
One relatively less examined form of earnings management is classification shifting. This practice involves reclassifying operating expenses as non-operating expenses to increase reported operating income without changing net income. McVay (2006) introduced classification shifting as a means through which managers can manipulate the presentation of financial performance while complying with accounting rules governing the calculation of net income. Since investors and financial analysts often place considerable emphasis on operating income when evaluating firms’ performance, classification shifting may influence their perceptions of profitability and operational efficiency.
Although classification shifting does not directly affect net income, it can distort the information conveyed by the income statement. By presenting higher operating income, managers may create a more favorable impression of a firm’s operating performance and potentially conceal underlying weaknesses. If investors rely heavily on operating income and fail to identify the reclassification of expenses, they may underestimate the firm’s financial difficulties. Such information distortion could contribute to the accumulation of unfavorable information and, under certain circumstances, increase stock price crash risk. However, the consequences of classification shifting may depend on firms’ financial conditions, reporting environments, and the incentives underlying managerial decisions.
The relationship between classification shifting and stock price crash risk may be particularly important in emerging markets, where institutional arrangements, financial reporting practices, and monitoring mechanisms differ from those in developed economies. In Iran, classification shifting has received attention in prior accounting research, but its implications for stock price crash risk remain insufficiently understood. Factors such as the relatively low direct cost of reclassification, weaknesses in monitoring mechanisms, and limitations in the consistent application of classification practices may create opportunities for managers to influence reported operating performance.
Nevertheless, classification shifting does not necessarily have the same consequences in every institutional setting. Managers may use this practice not only to conceal unfavorable information but also to smooth the presentation of financial performance or signal operational stability. Consequently, its relationship with stock price crash risk is an empirical question that requires investigation within the specific characteristics of the Iranian capital market.
Furthermore, the effect of classification shifting on crash risk may depend on firms’ information environments and financial characteristics. Information asymmetry can prevent investors from accurately assessing managerial decisions and the quality of reported earnings. Cash flow volatility may increase uncertainty about a firm's future financial performance and make it more difficult for investors to distinguish temporary fluctuations from underlying financial problems. Capital structure, particularly financial leverage, may also influence firms’ vulnerability to adverse financial developments by affecting their debt obligations and financial flexibility. These factors may therefore influence the strength or direction of the relationship between classification shifting and stock price crash risk.
Against this background, the present study examines the relationship between earnings management through classification shifting and stock price crash risk among firms listed on the Tehran Stock Exchange over the period 2012–2023. It also investigates whether the gap between operating income and net income, cash flow volatility, information asymmetry, and financial leverage influence this relationship. By examining these factors simultaneously, the study contributes to a better understanding of the circumstances under which classification shifting is associated with stock price crash risk in an emerging capital market.
Methods & Materials
This study employs a descriptive-correlational research design and is applied in terms of its purpose. It investigates the association between earnings management through classification shifting and stock price crash risk, with particular attention to the moderating roles of firms’ financial and informational characteristics.
The statistical population consists of companies listed on the Tehran Stock Exchange during the period 2012–2023. After applying the sample selection criteria, the final sample comprises 129 firms. To calculate the classification-shifting measures, additional financial information covering the period 2007–2012 was collected where necessary. The use of historical data helps provide the observations required to estimate the relevant measures and construct the research variables.
The required financial data were obtained from the Rahavard Novin database and the corporate information and financial statements published through the official information disclosure system of the Tehran Stock Exchange. The data were initially organized and processed in Microsoft Excel. Subsequently, the research variables were calculated, and the statistical analyses were conducted using EViews.
The dependent variable is stock price crash risk, which is measured using two commonly employed indicators: negative conditional skewness of stock returns and down-to-up volatility. Negative conditional skewness captures the asymmetry of a firm’s return distribution and reflects the tendency toward extreme negative returns. A more negative value generally indicates a greater likelihood of unusually large negative stock returns. Down-to-up volatility measures the relative variability of negative and positive firm-specific returns, providing an alternative indicator of crash-related risk. Using both measures allows the relationship between classification shifting and stock price crash risk to be assessed from different statistical perspectives.
The main explanatory variable is earnings management through classification shifting. This practice is identified through the reclassification of operating expenses into non-operating items, which increases reported operating income without changing net income. The analysis examines whether variation in the extent of classification shifting is associated with subsequent stock price crash risk.
In addition to the principal relationship, the study considers the difference between operating income and net income as a factor that may influence the association between classification shifting and crash risk. A larger gap between these two measures may indicate that operating income conveys a substantially different picture of financial performance from net income. However, this difference is not, by itself, conclusive evidence of earnings manipulation, because legitimate non-operating gains and losses may also contribute to the gap.
Three additional firm characteristics are examined: cash flow volatility, information asymmetry, and financial leverage. Cash flow volatility represents fluctuations in firms’ cash-generating capacity and captures an important dimension of financial uncertainty. Information asymmetry reflects differences in the information available to corporate insiders and external investors. Financial leverage represents the extent to which a firm relies on debt financing and is used to assess whether capital structure influences the relationship between classification shifting and crash risk.

The empirical analysis evaluates the relationship between classification shifting and each crash-risk measure and examines the potential moderating effects of the selected variables. The use of two alternative dependent-variable measures provides a robustness perspective by allowing the consistency of the findings to be assessed across different operationalizations of stock price crash risk.
Findings
The empirical results reveal a negative and statistically significant relationship between classification shifting and stock price crash risk. This finding indicates that, within the study sample, greater classification shifting is associated with lower measured crash risk. The result differs from the expectation that classification shifting necessarily increases crash risk by concealing unfavorable information. Instead, it suggests that the association between this earnings management technique and stock price crash risk may depend on the institutional and informational characteristics of the market under investigation.
One possible interpretation is that, in the Iranian capital market, classification shifting may be associated with managerial efforts to present more stable operating performance. However, the negative association alone does not establish that classification shifting genuinely reduces crash risk or that managers primarily use it to smooth earnings. Other firm characteristics, managerial incentives, or institutional factors may contribute to the observed relationship. Accordingly, the finding should be interpreted as an empirical association rather than definitive evidence of a causal or stabilizing effect.
The results also indicate that the gap between operating income and net income weakens the negative relationship between classification shifting and stock price crash risk. This finding suggests that the association between classification shifting and crash risk becomes less pronounced when operating income and net income diverge to a greater extent. A wider gap may make reported operating performance less representative of the firm’s overall profitability and reduce the usefulness of operating income as an indicator of financial condition. Nevertheless, because this gap may reflect both legitimate non-operating items and reporting choices, its interpretation requires caution.
The analysis further shows that cash flow volatility has a positive effect on stock price crash risk when crash risk is measured using negative conditional skewness. In addition, cash flow volatility weakens the negative relationship between classification shifting and crash risk under this measure. This result is consistent with the possibility that uncertainty in cash-generating capacity reduces the strength of the observed negative association between classification shifting and crash risk. However, this effect is not established consistently across both crash-risk measures.
Information asymmetry exhibits a similar pattern. Its positive association with crash risk is statistically significant when negative conditional skewness is used as the dependent variable, and it weakens the negative relationship between classification shifting and crash risk under this specification. This finding highlights the importance of the information environment in understanding crash risk. When external investors have less information about a firm's underlying economic conditions, assessing the quality and implications of reported operating income may become more difficult. Nevertheless, the lack of a consistent effect across both crash-risk measures indicates that the results should not be generalized beyond the specifications supported by the empirical evidence.
In contrast, financial leverage does not exhibit a statistically significant moderating effect on the relationship between classification shifting and stock price crash risk. This suggests that, within the sample and models examined, differences in firms’ debt financing do not significantly alter the observed association between classification shifting and crash risk. This result does not imply that leverage is irrelevant to financial risk more broadly; rather, its moderating role is not supported by the present empirical findings.
Taken together, the findings demonstrate that the relationship between classification shifting and stock price crash risk is not uniform across firms’ financial and informational conditions. The negative association identified in the main analysis is less pronounced in the presence of greater cash flow volatility and information asymmetry when crash risk is measured using negative conditional skewness. The moderating role of the operating-income-to-net-income gap further suggests that the relationship depends on the broader context in which reported operating performance is evaluated.
Conclusion & Results
This study investigates the relationship between earnings management through classification shifting and stock price crash risk among firms listed on the Tehran Stock Exchange during 2012–2023. It also examines the roles of the gap between operating income and net income, cash flow volatility, information asymmetry, and financial leverage in shaping this relationship.
The main finding is a negative and statistically significant association between classification shifting and stock price crash risk. This result differs from the conventional argument that classification shifting necessarily increases crash risk by allowing managers to conceal unfavorable information. One possible explanation is that the incentives and consequences of classification shifting differ across institutional settings. In the Iranian capital market, the observed relationship may reflect the way firms use income-statement classification to present operating performance, together with other characteristics of the firms and their reporting environments. However, the evidence does not establish that classification shifting improves financial reporting quality or causally reduces the likelihood of a stock price crash.
The results also demonstrate that the gap between operating income and net income weakens the negative association between classification shifting and crash risk. This finding underscores the importance of considering the broader composition of reported earnings rather than relying exclusively on operating income when assessing corporate performance. Investors and financial analysts should examine the relationship between operating and net income and consider whether differences arise from ordinary business activities or from discretionary classification choices.
Moreover, cash flow volatility and information asymmetry are positively associated with crash risk and weaken the negative relationship between classification shifting and crash risk when negative conditional skewness is used as the dependent variable. These results indicate that financial uncertainty and limitations in the information environment may be relevant to understanding the relationship between earnings presentation and stock price crash risk. However, because these effects are not consistently observed across both crash-risk measures, their implications should be interpreted with appropriate caution.
Financial leverage, by contrast, does not significantly moderate the relationship between classification shifting and stock price crash risk. This suggests that its role in this particular relationship may be less pronounced than the roles of cash flow volatility and information asymmetry within the models examined.
Overall, this study contributes to the literature by providing evidence on the relationship between classification shifting and stock price crash risk in an emerging capital market. Its findings highlight the importance of examining earnings-management practices in their institutional context and of considering alternative measures of crash risk. For investors, auditors, financial analysts, and regulators, the results emphasize the value of evaluating operating income alongside net income, assessing the quality of financial disclosures, and paying attention to firms with volatile cash flows or greater information asymmetry.
Future research could investigate the mechanisms underlying the negative association between classification shifting and crash risk, distinguish opportunistic reclassification from classification choices associated with legitimate differences in business activities, and examine whether the results remain robust across alternative measures of classification shifting, longer observation periods, and different institutional settings. Such extensions would help clarify whether the observed relationship reflects managerial reporting strategies, differences in firm characteristics, or other features of the capital market.


stock exchange

The Role of Conditional Conservatism in the Relationship Between Differentiation and Cost Leadership Strategies and Firm Value

Pages 43-78

https://doi.org/10.22054/qjma.2026.89249.2727

Mohammad Amri-Asrami, Seyed Kazem Ebrahimi, Tariq Khaled Ali

Abstract Focusing on competitive strategies is one of the key factors in creating competitive advantages and increasing firm 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 relationship between competitive strategies (differentiation and cost leadership) and firm value. This research is applied in nature and employs a quantitative approach. The statistical population includes companies listed on the Tehran Stock Exchange from 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 firm value. Conditional conservatism has a negative relationship with firm value, as it leads to the lower recognition of accounting earnings and consequently increases market value. Furthermore, conditional conservatism intensifies the negative effect of the differentiation strategy on firm value. In contrast, the cost leadership strategy has a positive and significant relationship with firm value, and conditional conservatism strengthens this relationship. The findings suggest that the alignment between competitive strategies and the level of conservatism in financial reporting can influence the market’s perception of firm performance and ultimately affect firm value.
Conditional conservatism, Cost leadership strategy, Differentiation strategy, Firm value
1. Introduction
Focusing on competitive strategies is one of the essential factors in creating sustainable competitive advantages, increasing productivity, and enhancing firm value. In the turbulent environment of capital markets, companies' strategic decisions must be aligned with the characteristics of financial reporting 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 recognizing losses more quickly than gains. This study aims to investigate the moderating role of conditional conservatism in the relationship between competitive strategies (including differentiation and cost leadership) and firm value. The results of this study can help provide a more accurate explanation of the interaction between strategic management decisions and financial reporting policies in creating value for shareholders.
Research Hypotheses
The first hypothesis is that the differentiation strategy has a negative and significant relationship with firm value.
The second hypothesis is that conditional conservatism has a negative and significant relationship with firm value.
The third hypothesis is that conditional conservatism has a negative and significant moderating effect on the relationship between differentiation strategy and firm value.
The fourth hypothesis is that cost leadership strategy has a positive and significant relationship with firm value.
The fifth hypothesis is that conditional conservatism has a positive and significant moderating effect on the relationship between the cost leadership strategy and firm value.
2. Literature Review and Hypothesis Development
In companies with more conservative accounting policies, financial information tends to understate the actual profitability of differentiation-related 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 determining 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 pursuing a strong differentiation strategy and, as a result, may lead to lower firm values than those of comparable companies with less conservative reporting policies (Talawa, 2024; Luo, 2025).
Therefore, it can be concluded that conditional conservatism, despite its role in improving the reliability of financial reporting, may have a negative effect on firm value in the context of a differentiation strategy. Since conservatism may prevent the full reflection of the benefits of innovation and differentiation in financial statements, investors may not be able to fully assess the strategic value of the company. Therefore, conditional conservatism is expected to weaken the relationship between the differentiation strategy and firm value, resulting in a significant negative moderating effect(Obiedallah & El Mahdy, 2025; Wu et al., 2025).
Companies that apply conditional conservatism may experience a lower cost of capital due to reduced information asymmetry (Ball, Kothari, & Nikolaev, 2013; Basu, 1997). This can help companies pursuing a cost leadership strategy access lower-cost sources of financing and thereby strengthen the positive impact of this strategy on firm value (Hill & Jones, 2012; Watts, 2003).
As a result, conditional conservatism may strengthen the positive relationship between the cost leadership strategy and firm value by increasing transparency, reducing information risk, and improving investor confidence.
3. Methodology
The present study is applied in nature and employs a quantitative approach. The statistical population includes companies listed on the Tehran Stock Exchange from 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 effects of competitive strategies and conditional conservatism, as well as their interaction effects between them, on firm value were examined.
4. Results
The results show that the differentiation strategy has a positive and significant relationship with firm value. Conditional conservatism has a negative relationship with firm value. Furthermore, conditional conservatism moderates the relationship between the differentiation strategy and firm value. In contrast, the cost leadership strategy has a positive and significant relationship with firm value, and conditional conservatism strengthens this relationship. The findings suggest that the alignment between competitive strategies and the level of conservatism in financial reporting can influence the market’s perception of firm performance and ultimately affect firm value.
5. Conclusion
Overall, the results indicate that conditional conservatism plays an important moderating role in the relationship between competitive strategies and firm value. Conservatism weakens the relationship between the differentiation strategy and firm value and strengthens the positive relationship between the cost leadership strategy and firm value. From a theoretical perspective, these findings emphasize the importance of aligning accounting policies with firms’ strategic orientations and, from a practical perspective, provide guidance to managers, accountants, and investors on selecting appropriate strategies and financial reporting practices to maximize firm market value.

stock exchange

The Impact of Environmental, Social and Governance Performance on Systematic Risk: The Role of Firm-Specific Factors

Pages 79-116

https://doi.org/10.22054/qjma.2026.85308.2669

Gharibe Esmailikia, Sara Seyedi

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 firms’ operations, growth, and performance. ESG performance considers non-financial elements such as climate change and corporate ethics, as these factors can exacerbate or reduce the vulnerability of markets; therefore, ESG performance can affect risk. On the other hand, the implementation and understanding of environmental, social, and governance activities may differ significantly across different types of companies and among investors. Accordingly, these differences may affect perceptions of systematic risk and how it is managed in financial markets. Therefore, it is essential to pay attention to firm-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 firms, considering the moderating role of firm-specific factors. The present study is applied and descriptive in terms of its purpose and is based on regression analysis. Data from 166 companies listed on the Tehran Stock Exchange were collected for the period from 2014 to 2023 and analyzed using econometric models and EViews software. The results show that ESG performance has a significant negative effect on systematic risk, meaning that firms with better ESG performance experience lower systematic risk. In addition, firm size, firm age, and market capitalization strengthen the risk-reducing effect of ESG performance on systematic risk, while the cost of debt weakens this effect.
Firm-specific factors, Cost of debt, Environmental, social, and governance performance, Firm value, Systematic risk
1. Introduction
In the contemporary global economic landscape, the importance of environmental, social, and governance (ESG) performance has been increasingly recognized due to its profound impact on firms’ operations, growth, and performance. ESG performance considers non-financial elements such as climate change and corporate ethics, as these factors can exacerbate or reduce the vulnerability of markets; therefore, ESG performance can affect risk. On the other hand, the implementation and understanding of environmental, social, and governance activities can differ significantly across different types of companies and among investors. Accordingly, these differences may affect perceptions of systematic risk and how it is managed in financial markets. Therefore, it is essential to pay attention to firm-specific factors in this context.
2. Methodology
Based on its nature and purpose, this research is classified as applied and descriptive and is based on regression analysis. The data required for the research variables and hypothesis testing were obtained from audited financial statements, independent auditors’ reports, and financial database software such as Rahvard Navin and Tadbir Pardaz. The research data were then compiled in Microsoft Excel and analyzed using EViews software.
In this research, the statistical population comprises all companies listed on the Tehran Stock Exchange. After applying the specified selection criteria, a total of 166 companies were included in the sample. Data were collected for the period from 2014 to 2023 and were compiled, summarized, classified, and refined using Microsoft Excel. Based on the research objectives, seven hypotheses were formulated as follows:
First hypothesis: Environmental, social, and governance performance has an impact on systematic risk.
Second hypothesis: The larger the firm, the greater the impact of environmental, social, and governance performance on reducing systematic risk.
Third hypothesis: The older the firm, the greater the impact of environmental, social, and governance performance on reducing systematic risk.
Fourth hypothesis: The lower the cost of debt, the greater the impact of environmental, social, and governance performance on reducing systematic risk.
Fifth hypothesis: An optimal capital structure enhances the impact of environmental, social, and governance performance on reducing systematic risk.
Sixth hypothesis: Higher investment strengthens the impact of environmental, social, and governance performance on reducing systematic risk
Seventh hypothesis: Higher market value strengthens the impact of environmental, social, and governance performance on reducing systematic risk.
To test the above hypotheses, the following regression models were used:



3. Conclusion
The present study examines the impact of environmental, social, and governance performance on systematic risk, considering the role of firm-specific factors. The results show that ESG performance has a significant negative effect on systematic risk, meaning that firms with better ESG performance experience lower systematic risk. These findings are consistent with theories of sustainability and responsible investment, which suggest that companies that adhere to environmental, social, and governance principles are more resilient to market fluctuations and are considered lower-risk investments by investors. The findings are consistent with those of Khorilov and Kim (2024) and Wang et al. (2024), as both studies emphasize that engagement in ESG activities can effectively reduce overall, systematic, and firm-specific risks. In addition, the findings of Albuquerque et al. (2020), who showed that companies with high ESG scores were more resilient during the 2008-2009 financial crisis, are in line with the results of the present study. Similarly, Bakhtiari (1402) confirmed the positive impact of ESG reporting on investors' risk perceptions.
One of the key findings of this research is the moderating role of firm-specific factors in the relationship between environmental, social, and governance performance and systematic risk. Specifically, firm size, firm age, and market capitalization strengthen the risk-reducing effect of ESG performance on systematic risk, while the cost of debt weakens this effect. These results indicate that larger and older companies, due to greater access to financial and managerial resources, are better able to reap the benefits of environmental, social, and governance performance and reduce their risk. Furthermore, companies with higher market capitalization may benefit more from environmental, social, and governance performance due to greater attention from institutional investors and stronger requirements to adhere to sustainability standards. In contrast, the findings show that the cost of debt reduces the negative impact of environmental, social, and governance performance on systematic risk and may even reverse this relationship. This result suggests that firms with a high cost of debt, due to financial pressures and debt repayment requirements, may not be able to fully reap the benefits of environmental, social, and governance performance and, as a result, may remain exposed to higher systematic risk. In addition, the variables of capital structure and investment amount do not significantly moderate the relationship between environmental, social, and governance performance and systematic risk.
Gidage et al. (2024) show that the impact of ESG on reducing systematic risk is less pronounced in well-capitalized firms, while larger, older firms and those with lower borrowing costs exhibit a greater mitigating effect of ESG on systematic risk sensitivity. These findings are consistent with those of the present study, which confirms that firm size and age can enhance the impact of ESG on reducing systematic risk.
Accordingly, it is recommended that corporate managers strive to improve their ESG performance not only to reduce risk but also to enhance their attractiveness to investors. Investors and policymakers can also use these indicators as tools for risk management and more informed decision-making.

stock exchange

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

Pages 117-147

https://doi.org/10.22054/qjma.2026.90950.2750

Iman Zare, Khadijeh Rabiee, Parisa Nobakht

Abstract This study investigates whether higher levels of executive internal debt reduce the lag in stock price adjustment, thereby enhancing stock price efficiency. Recognizing the critical influence of stock liquidity on price efficiency, this research specifically examines the moderating effect of stock liquidity on the relationship between executive internal debt and stock price efficiency. The study focuses on companies listed on the Tehran Stock Exchange, with data collected for the period 2018-2025. A literature review was conducted using library research methods, while financial data and explanatory notes of the sample companies were collected for empirical analysis. Through systematic elimination, a sample of 147 companies was selected. Descriptive and inferential statistics were employed to analyze the data. Prior to hypothesis testing, several diagnostic tests were conducted, including tests for heteroskedasticity, the F-test, the Hausman test, and the Jarque-Bera test. Multivariate regression analysis was then used to test the research hypotheses. The findings indicate that executive internal debt has a significant negative effect on the lag in stock price adjustments, a key indicator of stock price efficiency. Furthermore, the results demonstrate that stock liquidity plays a significant moderating role, strengthening the positive relationship between executive internal debt and stock price efficiency. These findings contribute to a deeper understanding of how executive compensation and financing arrangements may influence managerial incentives, offering valuable insights for policymakers aiming to improve stock price efficiency. The findings further suggest that executive internal debt, moderated by stock liquidity, may contribute to capital market efficiency by influencing information production and information asymmetry.
Capital Market, Efficiency, Internal Debt of the Executive, Stock Liquidity, Stock Price
1. Introduction
Stock prices are considered efficient when new information is rapidly incorporated into stock prices. One of the factors affecting stock prices and capital market efficiency is managerial incentives, which can significantly influence firms’ investment decisions. Accordingly, CEOs with higher levels of equity-based compensation (such as company shares or stock options) are more likely to adopt conservative corporate policies and take less risk because their personal interests are more closely aligned with the long-term interests of the company. This approach may lead to greater transparency in information disclosure, thereby improving the flow of information to the market and enhancing stock price efficiency. Defined-benefit pensions and deferred compensation are known in financial economics as “inside debt”. Therefore, CEO inside debt is important because it may account for a significant portion of CEO compensation (Huang et al, 2022). On the other hand, greater stock liquidity may reduce information asymmetry in the market and improve information production. Stock liquidity can increase stock price efficiency by encouraging market participants to acquire private information about the company (Baharmoghaddam et al., 2015). Performance-based compensation may also motivate CEOs to exert greater effort and improve firms’ information environments, potentially contributing to greater stock liquidity. The present study examines the relationship between executive inside debt and stock price efficiency, considering the moderating role of stock liquidity in this relationship.

2. Materials and Method
The present study adopts a positive research approach and is classified as applied research in terms of its purpose, descriptive research in terms of its nature, and correlational research in terms of its method. To collect data and information, a library-based approach was used to review the relevant literature, while the research data were obtained from companies’ financial statements, explanatory notes, and the monthly reports of the Stock Exchange. Descriptive and inferential statistics were used to analyze and summarize the collected data. Prior to hypothesis testing, diagnostic tests, including tests for heteroskedasticity, the F-limer test, and the Hausman test, were conducted. Multivariate regression analysis was then performed using EViews software to test the research hypotheses. The statistical population comprises companies listed on the Tehran Stock Exchange during the period from 1397 to 1403. Using a systematic exclusion method, 147 companies were selected as the final sample. Following Huang et al. (2022), the first and second hypotheses are formulated as follows: Hypothesis 1: Executive inside debt is significantly associated with stock price efficiency. Hypothesis 2: Stock liquidity moderates the relationship between executive inside debt and stock price efficiency.
3. Results and Discussion
For the first hypothesis, the p-values associated with the t-statistics for the intercept and the coefficients of executive inside debt, firm size, return on assets, market-to-book ratio, research and development expenses, operating cash flow, dividends paid, capital expenditures, financial recession, and advertising are below 5%, indicating that these coefficients are statistically significant. Executive inside debt has a negative and statistically significant relationship with stock price efficiency.
For the second research hypothesis, the p-values associated with the t-statistics for the intercept and the coefficients of executive inside debt, stock liquidity, the interaction between stock liquidity and executive inside debt, firm size, return on assets, market-to-book ratio, research and development expenses, operating cash flow, dividends paid, capital expenditures, financial recession, and advertising are below 5%, indicating statistical significance. The coefficients of executive inside debt and the interaction between stock liquidity and executive inside debt are −0.00081 and 0.00011, respectively, and both are statistically significant. The positive and statistically significant coefficient of the interaction term indicates that stock liquidity moderates the relationship between executive inside debt and 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 inside debt, by focusing on a more conservative capital allocation strategy, are less likely to engage in excessive risk-taking and debtor expropriation, and pay more attention to the quality of reporting and the reduction of the costs of financial misreporting. In fact, CEOs with more inside 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 in the relationship between executive inside debt and stock price efficiency, which indicates a change in the intensity of the significant and inverse effect of executive inside debt on stock price efficiency with changes in stock liquidity. In relation to the second hypothesis, it is argued that greater stock liquidity reduces information asymmetry 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 systems 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 efforts to improve 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 the use of derivatives because the development of futures and options may increase liquidity and moderate the negative relationship between managerial debt and price efficiency. It is also recommended that the disclosure regulations be amended to require 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.

Accounting and various aspects of finance

Corporate Social Responsibility and Managerial Empire-Building: The Moderating Role of CEO Overconfidence and Financial Constraints

Pages 149-180

https://doi.org/10.22054/qjma.2026.88457.2717

Mahdi Alibalai

Abstract The study investigates how corporate social responsibility (CSR) influences managerial empire‑building while considering the moderating roles of financial constraints and CEO overconfidence. Using data from 105 firms listed on the Tehran Stock Exchange during the period 2014–2022 and applying multiple regression models with panel data, the findings show that CSR activities significantly restrain managers from expanding their control in inefficient ways. The results further indicate that financial constraints strengthen this negative relationship, meaning that when firms face limited financial resources, CSR engagement more strongly reduces managers’ empire‑building tendencies. In addition, CEO overconfidence amplifies this effect, as overconfident managers display fewer expansionist behaviors when they are involved in CSR initiatives. Overall, the study highlights the joint importance of financial conditions and managerial psychological traits in shaping the impact of CSR on strategic decision‑making. The research contributes a unified framework explaining the internal mechanisms linking CSR to managerial empire‑building and offers insights for designing more effective governance and monitoring policies.

1. Introduction
Agency conflicts stemming from the separation of ownership and control provide managers with opportunities to engage in actions that serve their own interests rather than those of shareholders. One manifestation of such opportunistic behavior is managerial empire-building, which refers to the excessive expansion of firm assets, operations, and investments beyond value-maximizing levels. While such expansion may not improve firm performance, it can enhance managerial power, influence, and job security.
Corporate social responsibility has been increasingly recognized as a mechanism that strengthens transparency, accountability, and stakeholder engagement. Through enhanced disclosure and stakeholder pressure, CSR can reduce information asymmetry and restrict managers’ ability to pursue self‑interested strategies. Nevertheless, the effectiveness of CSR in constraining empire-building may depend on the behavioral characteristics of the CEO and the firm’s financial conditions. Overconfident CEOs tend to overestimate expected returns and underestimate risks, making them more inclined toward aggressive expansion. In contrast, financial constraints limit managerial discretion by restricting access to external financing, which can enhance the disciplining role of CSR.
This study investigates whether CSR reduces managerial empire-building and how this relationship is moderated by CEO overconfidence and financial constraints, offering insights relevant to emerging markets such as Iran, where firms often face high information asymmetry and limited external financing.
2. Literature Review
Prior research emphasizes CSR as a governance tool capable of aligning managerial actions with stakeholder interests by enhancing disclosure quality and reducing agency problems. However, empirical findings remain mixed: some studies argue that CSR mitigates opportunistic behavior, while others suggest that it may serve symbolic purposes without substantial governance effects.
The literature on CEO overconfidence highlights that such managers tend to overinvest, pursue expansive projects, and display excessive optimism regarding future performance. This behavioral bias can undermine internal and external monitoring mechanisms. Meanwhile, financial constraints play a significant role in disciplining managers. When access to external resources is limited, managers face reduced freedom to undertake large-scale projects unless they are economically justified.
Building on these perspectives, three hypotheses are formulated:
1. CSR reduces managerial empire-building.
2. Financial constraints strengthen the negative relationship between CSR and managerial empire-building.
3. CEO overconfidence weakens the negative relationship between CSR and managerial empire-building.
3. Methodology
The study uses data from 105 firms listed on the Tehran Stock Exchange between 2014 and 2022. A balanced panel dataset is constructed following standard screening criteria.
Variables:
· Empire-building (dependent variable): measured by abnormal asset growth.
· CSR (independent variable): constructed using a disclosure index based on environmental, social, and governance dimensions.
· CEO overconfidence (moderator): measured by behavioral indicators derived from patterns of investment and financing decisions.
· Financial constraints (moderator): assessed using the Altman Z‑score.
· Control variables: firm size, leverage, profitability, growth opportunities, and board-related characteristics.
Models:
Three panel regression models are estimated:
1. CSR’s direct effect on empire-building
2. The moderating role of financial constraints
3. The moderating role of CEO overconfidence
Panel specification tests are conducted, and robust standard errors are applied to address heteroscedasticity and autocorrelation.
4. Results
The first model indicates that CSR has a negative and statistically significant effect on empire-building, supporting the view that CSR enhances transparency and restricts opportunistic managerial expansion.
The second model reveals that financial constraints amplify CSR’s inhibitory effect. Under constrained conditions, managers face fewer opportunities for discretionary expansion, and CSR pressure becomes more influential.
The third model shows that CEO overconfidence weakens the negative relationship between CSR and empire-building. Overconfident CEOs remain inclined toward aggressive growth strategies and pay less attention to stakeholder expectations embedded in CSR activities.
Robustness checks confirm the stability of the findings, highlighting the reliability of the results across alternative model specifications.
5. Discussion
The findings demonstrate that CSR can function as a complementary governance mechanism by providing transparency, enhancing stakeholder monitoring, and reducing managerial discretion. However, CSR’s effectiveness is contingent upon internal and external moderating forces. Financial constraints improve CSR’s ability to limit opportunistic expansion, while CEO overconfidence works in the opposite direction.
These results suggest that CSR alone may not be sufficient to curb empire-building in all contexts. The behavioral traits of top executives and firm‑level financial conditions play critical roles in determining the degree to which CSR fulfills its governance potential.
6. Conclusion
This study provides empirical evidence that CSR significantly reduces managerial empire-building. Financial constraints strengthen this effect, whereas CEO overconfidence undermines it. The findings highlight the importance of considering both managerial behavioral characteristics and firm financing conditions when assessing the governance role of CSR, particularly in emerging markets with high information asymmetry.

stock exchange

The Role of Auditor Reputation as a Moderator in the Relationship of Tax Avoidance and Institutional Ownership with Auditor Changes

Pages 181-215

https://doi.org/10.22054/qjma.2026.90678.2746

Abdolrasoul Rahmanian Koushkaki, Somayeh Rayat pisheh

Abstract The objective of the present study is to investigate the moderating role of auditor credibility in the relationship of tax avoidance and institutional ownership with auditor switching. This study is applied, and in terms of methodology, it is a correlational study of the causal type (ex-post facto). The statistical population of the study includes all companies listed on the Tehran Stock Exchange. Using a systematic sampling method, 142 companies were selected as the sample, and they were examined over a 10-year period between 2015 and 2024. 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.
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 changes, 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 a company’s financial health and governance. If stakeholders are not aware of why and how companies change their auditors under difficult economic conditions, their interpretation of financial reports and market trends may be seriously affected; therefore, conducting this study is necessary to empower analysts and investors to interpret these signals more accurately and manage risks better. In addition, 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 knowledge in 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 received less attention, but its importance in assessing corporate transparency and accountability is undeniable.
2. Literature Review
Auditors play an important role in influencing management decisions regarding auditor changes. Each country has regulations regarding auditor changes, but there is still debate about the factors that influence a company's decision to change its auditor. Auditor changes can occur for reasons such as resignations, dismissals, or serious disagreements between management and auditors. Companies often change 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 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 applied in nature and, in terms of the research approach, has adopted the causal correlational method (ex-post facto) 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 included. In addition, companies active in the banking, insurance, and investment sectors were excluded from the sample. After applying these filters, 142 companies, including 1,420 firm-year observations, were selected as the final sample. For data analysis, the mixed panel data method was used with Eviews 12 software. Since the main dependent variable (auditor change) is a binary 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.
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 the interpretation of tax laws. 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 may 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 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 the 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 the auditor does not change.
6. Conclusion
Auditor switching can be used to conceal the aggressive nature of tax avoidance, reduce the likelihood of detecting 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 switching, 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 switching. 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 relationship between 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 switching 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.


Accounting and various aspects of finance

The Impact of Financial Disclosure Complexity on the Iranian Capital Market Reaction: The Moderating Role of Social Media Attention

Pages 217-258

https://doi.org/10.22054/qjma.2026.91021.2753

Sajede HasanNejadNeysi

Abstract This study examines the effect of financial disclosure complexity on the Iranian capital market reaction, focusing on the moderating role of social media attention. Drawing on limited attention theory and information processing cost theory, the study hypothesizes that complex disclosures weaken immediate market reactions, but that pre-disclosure attention on Persian Twitter mitigates this negative effect. Using panel data from 128 non-financial firms listed on the Tehran Stock Exchange over 2016–2023 (1,024 firm-year observations), disclosure complexity is measured via a composite index of report length, numerical density, and ambiguity. Investor attention is proxied by the logarithm of firm-specific Twitter posts in the five days before annual report releases, extracted using Python and Persian NLP tools. Fixed-effects panel regressions with firm-clustered robust standard errors show that a one-standard-deviation increase in complexity reduces cumulative abnormal returns (CAR[0,+1]) by about 1.4%. More importantly, the interaction between complexity and attention is positive and significant: for firms in the highest attention quartile, the negative effect of complexity becomes statistically indistinguishable from zero. The direct effect of attention alone is insignificant, suggesting that attention mainly moderates rather than directly informs prices. The findings imply that social media attention can serve as a cognitive corrective in emerging markets, helping investors process complex disclosures. Regulators and firms should therefore simplify reporting and use digital channels to attract constructive attention.
Limited Attention, Behavioral Finance, Financial Disclosure Complexity, Social Media, Twitter, Market Reaction, Tehran Stock Exchange, Panel Data, Event Study
1. Introduction
This study investigates the impact of financial disclosure complexity on the reaction of the Iranian capital market, emphasizing the moderating role of social media attention. Grounded in behavioral finance, specifically limited attention theory and information processing costs, the research addresses two fundamental questions: (1) whether more complex financial disclosures lead to weaker market reaction in the Tehran Stock Exchange (TSE), and (2) whether attention generated on Persian Twitter moderates this negative relationship. The study provides empirical evidence from an emerging market context, contributing to the literature on cognitive biases in financial decision-making and the informational role of social media.
2. Literature Review
The theoretical framework integrates Limited Attention Theory (Kahneman, 1973; Hirshleifer & Teoh, 2003) and Information Processing Cost Theory (Bloomfield, 2008). Investors face cognitive constraints, operating as selective information processors. Complex disclosures—characterized by length, numerical density, and ambiguous language—elevate processing costs, leading to incomplete or delayed price adjustments. This phenomenon is particularly pronounced in emerging markets like Iran, where retail investors with lower financial literacy constitute a significant portion of market participants. Concurrently, the digital attention economy paradigm suggests social media platforms have become primary arenas for attracting investor attention. Platforms like Twitter facilitate collective discourse and cognitive facilitation, potentially mitigating the adverse effects of information complexity. Based on this synthesis, two hypotheses were developed: H1 posits a negative relationship between financial disclosure complexity and immediate market reaction (measured by cumulative abnormal returns and abnormal trading volume). H2 proposes that pre-disclosure social media attention positively moderates this relationship; the negative effect of complexity on market reaction is weaker for firms receiving higher levels of digital attention.
3. Methodology
The study employs a quantitative, event-study-based design with panel data spanning 2016–2023. The final sample comprises 1,024 firm-year observations from 128 non-financial companies listed on the TSE, selected through systematic screening. Disclosure complexity was measured using a multidimensional composite index, standardizing and averaging three proxies: (1) report length (logarithm of word count in explanatory notes), (2) numerical density (ratio of numerical digits to total words), and (3) degree of ambiguity (frequency of uncertain words such as "may," "probably," "risk"). Textual data were extracted from financial reports on the Codal database using Python libraries (PyPDF2, pdfplumber, BeautifulSoup) and processed with Hazm, a specialized Persian NLP library. Investor attention was quantified using data from Persian Twitter. Over 250,000 Persian tweets containing company-specific keywords were collected using snscrape and tweepy libraries. The attention metric (ATTN) was defined as the natural logarithm of the average daily count of unique, firm-specific posts during the five-day window preceding annual report releases. Control variables included firm size, book-to-market ratio, profitability (ROA), leverage, institutional ownership, Big Four auditor quality, and market return index. The analytical approach employed fixed-effects panel regression models with firm-clustered robust standard errors. The main model tested the interaction between COMP and ATTN, with robustness ensured through alternative variable constructions, different event windows, GMM estimation, and subsample analyses.
4. Results
The empirical analysis provides strong support for both hypotheses. First, a statistically significant (p < 0.01) negative coefficient was found for the complexity variable (COMP). Economically, a one-standard-deviation increase in complexity leads to an approximately 1.4% reduction in short-window cumulative abnormal returns (CAR[0,+1]). This confirms that greater disclosure complexity dampens the market's immediate price adjustment, supporting limited attention and information processing cost theories. Second, the interaction term between COMP and ATTN was positive and statistically significant (p < 0.05). Marginal effect analysis revealed that the negative slope of complexity on returns flattens as social media attention increases. For firms in the highest attention quartile, the adverse effect of complexity becomes statistically indistinguishable from zero, demonstrating that high levels of digital attention can effectively neutralize the information processing barrier created by complex disclosures. Notably, the direct effect of social media attention alone on returns was insignificant, highlighting that its primary role is moderating rather than directly price-informative. Robustness checks using alternative windows, volume measures (CAV), different complexity specifications, and subsample analyses consistently reaffirmed the core results. Subsample analysis showed that the moderating effect of attention was stronger for firms with lower institutional ownership, where retail investors predominate.
5. Conclusion
This research establishes that the efficiency of the Iranian capital market in incorporating complex financial information is not determined by disclosure complexity alone but is fundamentally contingent upon the level of investor attention it garners in the digital ecosystem. It provides compelling evidence that social media activity can function as a societal corrective to cognitive limitations, enhancing price discovery. The study advocates for an integrated perspective in market regulation and corporate strategy that simultaneously addresses the quality of formal disclosures and the dynamics of informal digital communication channels. For regulators, the evidence underscores the need for policies promoting simplification and readability in mandatory disclosures. For corporate managers, the results highlight the strategic importance of active investor relations in the digital sphere. For retail investors, the study serves as a caution about cognitive biases and suggests consulting credible informal channels when confronting complex reports. Future research could extend this work by incorporating multiple social media platforms, employing advanced NLP techniques to distinguish between productive and superficial attention, and exploring cross-country comparative studies.

Accounting tools

Corporate Digital Responsibility and Financial Performance: The Mediating Role of Organizational Reputation and the Moderating Role of Workforce Digital Transformation

Articles in Press, Accepted Manuscript, Available Online from 22 July 2026

https://doi.org/10.22054/qjma.2026.90630.2745

hamid reza talaei, amir ehsan zahedi

Abstract 1. Introduction

This paper aims to fill this gap by exploring how CDR can affect the financial performance of Ofogh Kourosh Company and the mediating role of organizational reputation and the moderating role of workforce digital transformation in this relationship. The rise of digital technologies has radically transformed the way businesses operate, offering new opportunities for innovation and business models. However, these changes also introduce new legal, social, and ethical challenges. Corporate Digital Responsibility, as a new concept, requires organizations to adhere to ethical principles in their use of digital technologies, which can ultimately improve their financial performance. This research explores whether organizations that adopt CDR principles can experience better financial outcomes, and how organizational reputation and workforce digital transformation can influence this relationship. In the digital age, organizations face significant challenges related to digital responsibility. Corporate Digital Responsibility (CDR) has emerged as a new approach, compelling organizations to follow ethical, transparent, and secure practices when utilizing digital technologies and data. CDR emphasizes protecting privacy, ensuring cybersecurity, and using new technologies ethically. This not only helps build trust with stakeholders but also enhances organizational performance. Despite growing interest in CDR, there has been limited research on the direct relationship between Corporate Digital Responsibility and organizational financial performance, particularly in emerging economies such as Iran.



2. Literature Review

As one of the largest and most successful retail chains in Iran, Ofogh Kourosh Company is an ideal example to examine the impact of corporate digital responsibility on financial performance and organizational reputation. The company has a prominent position in the Iranian retail industry due to its large operational scale, daily interaction with a wide range of customers, and use of modern technologies in supply chain processes. Ofogh Kourosh has not only made significant efforts in the field of digitalization, but also faces significant challenges in the field of digital transformation of employees; a challenge that plays a vital role in the success or failure of implementing corporate digital responsibility. In the retail industry, gaining the trust of customers and stakeholders is of particular importance to maintain and increase market share. Organizational reputation, as one of the key success factors, plays an important role in attracting and retaining customers, creating competitive differentiation, and strengthening organizational communications. As Ofogh Kourosh is continuously evaluating its financial performance and improving its reputation, it provides a suitable platform for studying the relationship between corporate digital responsibility and organizational reputation and financial performance.

3. Methodology

The research is applied in its purpose and descriptive in terms of methodology. To collect data, a standard questionnaire was used to measure Corporate Digital Responsibility, organizational reputation, workforce digital transformation, and financial performance. The questionnaire's validity was ensured through content validity, and its reliability was verified using Cronbach's alpha. The study's statistical population consisted of all employees of Ofogh Kourosh Company, with a sample of 105 selected using purposive sampling. Structural Equation Modeling (SEM) was used to analyze the data, as it is suitable for examining complex relationships between variables. The key variables examined in this study include Corporate Digital Responsibility, organizational reputation, workforce digital transformation, and financial performance. Corporate Digital Responsibility is the responsible and ethical use of digital technologies by organizations, while organizational reputation is stakeholders' positive perceptions of the organization. Workforce digital transformation is the process of enabling employees to use digital technologies effectively, and financial performance is the dependent variable, reflecting the organization's financial success.

4. Results

The results of the data analysis indicate that Corporate Digital Responsibility has a significant positive impact on the financial performance of Ofogh Kourosh Company. Furthermore, organizational reputation serves as a mediating factor in this relationship, suggesting that organizations that adhere to CDR principles can improve their reputation, which, in turn, positively influences their financial performance. The findings also demonstrate that workforce digital transformation acts as a moderator, enhancing the impact of Corporate Digital Responsibility on financial performance. In other words, organizations that equip their employees with digital skills and enable them to adapt to technological changes can leverage Corporate Digital Responsibility to achieve better financial outcomes.

The study shows that organizations with a strong commitment to Corporate Digital Responsibility, such as ensuring data privacy, cybersecurity, and transparency in digital practices, can improve their long-term financial performance. This research emphasizes that organizations should not only follow CDR principles but also continuously update and effectively implement them in their processes. The study also highlights that while CDR can enhance financial performance, the effect can be more substantial in organizations that prioritize workforce digital transformation.

Additionally, organizational reputation was found to play a crucial role in improving financial performance. Organizations with better reputations are more likely to attract customers, investors, and employees, thereby contributing to improved financial performance. As a result, strengthening organizational reputation through responsible digital practices can serve as a competitive advantage. This finding suggests that organizations should invest in building their reputations through transparent digital practices and the ethical use of technology, which can help improve both their public image and financial outcomes.

5. Discussion

This study provides valuable insights into the relationship between Corporate Digital Responsibility (CDR) and financial performance, showing that CDR has a significant positive impact on financial performance. However, the effect of CDR on financial performance depends on how effectively it is implemented and integrated with other organizational strategies, such as workforce digital transformation and organizational reputation. Organizations that adhere to CDR principles and strengthen their reputation are more likely to experience better financial outcomes. Moreover, workforce digital transformation plays a vital role in enhancing the impact of CDR on financial performance. Organizations that empower their employees with digital skills and equip them to use new technologies effectively are better positioned to benefit from CDR's positive effects.

6. Conclusion

The findings of this study underscore the importance of Corporate Digital Responsibility as both an ethical responsibility and a strategic tool that can enhance organizational performance in a competitive market. To achieve the best possible results, organizations must continuously update their CDR strategies and integrate them into their broader business operations. Additionally, organizations should focus on building their reputation through transparent digital practices and ensuring that their employees are well-prepared to adapt to digital transformations.

Based on the findings, managers are encouraged to prioritize Corporate Digital Responsibility and implement strategies that enhance the organization's reputation and promote digital skills among employees. This approach can help organizations improve their financial performance and establish themselves as trusted and reputable entities in the market. Furthermore, future research can examine the impact of CDR on financial performance across industries and explore the role of other mediating variables, such as customer satisfaction, employee loyalty, stakeholder trust, and organizational innovation.

Acknowledgments

We would like to thank and appreciate the cooperation of various levels of management of the Ofogh Kourosh complex and all participants in this research who spent their time and patience helping us in carrying out the research stages.

Audit Quality

Modeling the Factors Affecting Sustainability in Auditors’ Decision-Making Using the Interpretive Structural Modeling (ISM) Approach

Articles in Press, Accepted Manuscript, Available Online from 22 July 2026

https://doi.org/10.22054/qjma.2026.92615.2772

ahmad hasanpour, Mehdi Alinezhad Sarokolaei, Ahmad Mohammadi, Yones Badavar nahandi

Abstract 1. Introduction

Independent auditors’ decision-making has always been of great importance due to its complex nature, inherent uncertainty, and far-reaching effects on the credibility of financial reporting and investors’ trust. During the audit process, auditors face a vast amount of information, evidence, and complex issues that challenge their professional judgment. The stability, consistency, and reliability of these judgments under time pressure, organizational constraints, economic conditions, and legal requirements give rise to a crucial concept known as decision-making stability. This stability not only ensures the quality of financial reporting, but also strengthens the social capital of the auditing profession. However, the research literature in Iran has paid limited comprehensive attention to identifying and modeling the factors affecting this stability. Therefore, the main objective of this study has been to address this theoretical and practical gap by identifying, explaining, and prioritizing the factors influencing the decision-making stability of independent auditors in Iran, and by providing a comprehensive and localized framework for improving this vital process. This study seeks to determine which factors in the individual, organizational, environmental, and professional levels play the greatest role in strengthening or weakening judgment stability, how these factors are causally related, and which of them serve as foundational and driving forces. Ultimately, the applied goal of the study is to provide a practical model for professional policymakers, audit firm managers, and educational institutions in order to enhance the stability and reliability of auditors’ decisions.

2. Materials and Methods

To achieve the above objectives, this research adopted a mixed exploratory-structural approach. In the first phase, the fuzzy Delphi technique was used to identify and refine the initial variables affecting decision-making stability. This method was considered highly appropriate for this stage because of its ability to collect expert opinions, achieve consensus, and reduce the effect of individual biases. The expert group in this phase consisted of 10 university professors, partners of audit firms, and prominent professional specialists with significant academic and practical experience. The Delphi process was conducted over three rounds, and in each round the items extracted from the theoretical literature and initial interviews were evaluated. Using fuzzy logic, the degree of agreement and the dispersion of opinions were analyzed, and in the end, 179 items were approved by the experts as final indicators. These items were considered capable, in terms of importance and conceptual stability, of explaining decision-making stability. In the second phase, to analyze causal relationships and determine the hierarchical structure among the identified factors, Interpretive Structural Modeling (ISM) was employed. This method is highly effective for mapping complex and directional relationships among variables, especially in social and organizational systems. For implementing this model, a questionnaire was designed based on the items confirmed in the Delphi phase and distributed among 300 independent auditors. After collecting and analyzing the data using specialized software, the relationships among the factors were determined and their different levels of importance were identified. This two-stage approach made it possible to identify the factors comprehensively and to gain a deep understanding of the relationships among them.

3. Results and Discussion

The research findings led to the identification of eight key factor categories and the presentation of a comprehensive model for the decision-making stability of independent auditors in Iran. These factors include: Situational, Occupational, and Work Pressures (C1); Cognitive, Skill-Based, and Knowledge Factors (C2); Technology, Tools, and Executive Methods (C3); Decision-Making Stability and Its Consequences (C4); Organizational, Managerial, and Cultural Factors (C5); Independence, Professional Governance, and Public Trust (C6); Environmental, Economic, and Legal Factors (C7); and Individual, Psychological, and Ethical Factors (C8). Analyses based on the ISM model revealed that these factors possess a hierarchical and dynamic structure. At the lowest and most foundational level of the model are factors that play the most driving role; these include cognitive, skill-based, and knowledge factors (C2) (such as analytical ability, experience, and specialized knowledge), individual, psychological, and ethical factors (C8) (such as resilience, self-control, and professional integrity), and independence, professional governance, and public trust (C6) (which provide the necessary institutional framework for independent judgment). At the intermediate level are factors such as organizational, managerial, and cultural factors (C5) and work and situational pressures (C1), which act as facilitating or moderating factors and can either strengthen or weaken the influence of the foundational factors. At the higher and framework-forming levels are environmental, economic, and legal factors (C7) and technology, tools, and executive methods (C3), which provide the overall context and platform for the auditor’s activity. Finally, decision-making stability and its consequences (C4) were identified as the main output and the highest level of this complex system. This hierarchical structure indicates that decision-making stability is the result of multifaceted and systemic interactions among variables and cannot be reduced to a single dimension.

4. Conclusion

The results of this study have significant theoretical and practical implications. From a theoretical perspective, by presenting a localized, comprehensive, and causal model for the decision-making stability of independent auditors in Iran, this research has substantially enriched the scholarly literature in the fields of auditing and professional behavior. Discovering the hierarchical relationships and identifying the foundational (driving), mediating, and framework-forming factors provides a more systemic and in-depth perspective on professional judgment phenomena, extending beyond simple correlational analyses. From a practical standpoint, the research findings offer valuable practical guidance for various stakeholders. For policymaking and professional oversight bodies, these results can serve as a basis for designing policies to strengthen auditor independence, revise regulations, and improve quality assurance. Audit firm managers can focus on organizational and cultural factors (C5) and by providing a supportive environment, manage work pressures (C1), thereby enhancing decision-making stability among their staff. Furthermore, training programs should concentrate on strengthening the cognitive, skill-based, and psychological factors (C2 and C8) of auditors. Optimal utilization of modern technologies (C3) can also serve as a facilitating factor, enhancing the quality and stability of professional judgment. Ultimately, understanding these complex relationships will lead to improved credibility of financial reporting and increased investor confidence as the final outcome (C4). Thus, by offering a deeper understanding of the factors influencing decision-making stability, this research has charted a practical roadmap for enhancing the quality and reliability of the auditing profession in Iran.

Keywords: Decision-making stability, Independent auditors, Factors influencing decision-making, Interpretive Structural Modeling.

Accounting report

Contingency Modeling of Financial Performance Sustainability Based on Integrated Reporting, Emphasizing the Moderating Role of the Corporate Risk Environment Triangle

Articles in Press, Accepted Manuscript, Available Online from 09 September 2026

https://doi.org/10.22054/qjma.2026.92646.2774

Ali Aghanasiri, Maryam Emamimibody

Abstract Financial performance sustainability is a firm’s strategic ability to maintain long-term wealth and operational equilibrium, a process often complicated by managerial and environmental volatility (De Graaff & Steens, 2023). In capital markets, issues such as information opacity, earnings management, and reliance on high-cost liquidity—exacerbated by sanctions and technological gaps—undermine this sustainability (Zennaro et al., 2024). Furthermore, macroeconomic pressures like inflation and exchange rate fluctuations diminish financial predictability.

Under these volatile conditions, Integrated Reporting (IR) serves as a pivotal mechanism for stability by synthesizing strategic and sustainability data (Alsayed, 2024). By mitigating information asymmetry and bolstering resilience, IR shifts managerial focus toward long-term value creation and stakeholder trust (Ashtab & Dehghan, 2023). However, the impact of IR is not uniform; it is contingent upon a firm’s unique risk environment. This environment is shaped by the interplay between financial constraints, institutional ownership structures, and product market competition, which explains the heterogeneity in sustainability outcomes (Roberts et al., 2023). Accordingly, the following hypotheses are formulated to empirically test these relationships.

H1: Integrated Reporting has a positive and significant impact on financial performance sustainability.

H2: The moderating effect of financial constraints weakens the impact of integrated reporting on financial performance sustainability.

H3: The moderating effect of institutional ownership strengthens the impact of integrated reporting on financial performance sustainability.

H4: The moderating effect of product market competition strengthens the impact of integrated reporting on financial performance sustainability.

2. Literature Review

Integrated Reporting (IR) represents a strategic evolution in value creation, utilizing signaling theory to stabilize financial performance sustainability by integrating financial and qualitative data (Barth et al., 2022). From an agency theory perspective, IR fosters integrated thinking, mitigating managerial short-termism and opportunistic behaviors to ensure earnings stability (Melloni & De-Villiers, 2019). However, its effectiveness is strictly contingent upon the firm’s specific risk environment (Roberts et al., 2023).

In instances of financial distress, pecking order theory suggests IR serves as "informational collateral," preventing credit deadlocks and reducing capital costs through enhanced transparency (Garcia-Sanchez & Nguyen, 2022; Lee & Zhang, 2022). Furthermore, according to the efficient monitoring hypothesis, institutional investors act as a disciplinary mechanism, validating IR and shifting market focus toward long-term sustainability (Bushee & Noe, 2021; Khoa, 2024). Finally, product market competition serves as an external disciplinary force that promotes financial sustainability via strategic differentiation, even when considering proprietary cost constraints (Pavlović et al., 2023). This theoretical synthesis explains how internal and external pressures redefine IR dynamics.

3. Methodology

This applied, descriptive study follows a retrospective approach using quantitative data from 126 Tehran Stock Exchange companies (1,260 firm-year observations) over the period 2014–2023. Unit root tests (Levin, Lin, and Chu) ensured data stationarity. Based on Chow and Hausman test results, the Fixed Effects panel data method was selected to estimate the four research models and test the hypotheses.

〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖Size〗_(i,t)+α_3 〖Leveage〗_(i,t)+α_4 〖Growth〗_(i,t)+α_5 〖MTB〗_(i,t)+α_6 〖ROA〗_(i,t)+ε_(i,t) (1)

〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖FC〗_(i,t)+α_3 (〖IR〗_(i,t)*〖FC〗_(i,t))++α_4 〖Size〗_(i,t)+α_5 〖Leveage〗_(i,t)+α_6 〖Growth〗_(i,t)+α_7 〖MTB〗_(i,t)+α_8 〖ROA〗_(i,t)+ε_(i,t) (2) 〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖INS〗_(i,t)+α_3 (〖IR〗_(i,t)*〖INS〗_(i,t))++α_4 〖Size〗_(i,t)+α_5 〖Leveage〗_(i,t)+α_6 〖Growth〗_(i,t)+α_7 〖MTB〗_(i,t)+α_8 〖ROA〗_(i,t)+ε_(i,t) (3)

〖SFP〗_(i,t)=α_0+α_1 〖IR〗_(i,t)+α_2 〖LI〗_(i,t)+α_3 (〖IR〗_(i,t)*〖LI〗_(i,t))++α_4 〖Size〗_(i,t)+α_5 〖Leveage〗_(i,t)+α_6 〖Growth〗_(i,t)+α_7 〖MTB〗_(i,t)+α_8 〖ROA〗_(i,t)+ε_(i,t) (4)



The variables in these two models include financial performance sustainability (〖SFP〗_(i,t)),integrated reporting (〖IR〗_(i,t)), Financial Constraints (〖FC〗_(i,t)), Institutional Ownership (〖INS〗_(i,t)), Product Market Competition (〖LI〗_(i,t)), firm size (〖Size〗_(i,t)), financial leverage (〖Leveage〗_(i,t)), Growth Rate (〖Growth〗_(i,t)), firm value (〖MTB〗_(i,t)) and Return on Assets (〖ROA〗_(i,t)).

4. Results

The research hypotheses were tested using multiple linear regression. To ensure the robustness of the results and avoid spurious regression, several diagnostic tests were performed beforehand, as detailed in Table (1).

Table 1

Diagnostic tests of the research models

Model Test Statistic Probability Test Result



(1) Chow 10.36 0.000 Panel Data Method

Hausman 15.09 0.012 Fixed Effects

Breusch-Pagan-Godfrey 2.26 0.159 Homoscedaticity

Wooldriidge 1.56 0.457 No Autocorrelation



(2) Chow 11.14 0.000 Panel Data Method

Hausman 16.28 0.008 Fixed Effects

Breusch-Pagan-Godfrey 2.41 0.124 Homoscedaticity

Wooldriidge 1.56 0.457 No Autocorrelation



(3) Chow 11.52 0.000 Panel Data Method

Hausman 16.88 0.019 Fixed Effects

Breusch-Pagan-Godfrey 2.32 0.162 Homoscedaticity

Wooldriidge 1.89 0.236 No Autocorrelation



(4) Chow 11.33 0.000 Panel Data Method

Hausman 16.67 0.013 Fixed Effects

Breusch-Pagan-Godfrey 2.12 0.160 Homoscedaticity

Wooldriidge 1.78 0.334 No Autocorrelation



The estimation results of the four models indicate that integrated reporting has a positive and significant impact on financial performance sustainability coefficient of 0.062, p = 0.007. This suggests that transparency arising from the integration of financial and non-financial information builds stakeholder trust and enhances corporate profitability stability (supporting H1). Regarding moderating factors, the findings reveal that financial constraints exert a weakening effect on this relationship, with a significant interaction coefficient of -0.042, p=0.009, thus supporting H2. Conversely, institutional ownership does not play an active supervisory role in strengthening the impact of integrated reporting, as the interaction term failed to reach statistical significance p = 0.91, leading to the rejection of H3. Finally, product market competition significantly strengthens the positive effect of integrated reporting on financial performance sustainability coefficient of 0.009, p = 0.008, confirming H4. Overall, the results demonstrate that alongside voluntary reporting, financial structure and the competitive environment are decisive factors in firms' financial sustainability.

5. Discussion

The study confirms that integrated reporting enhances financial sustainability, aligning with Elsayed (2024), Berendri and Stark (2023), and Giuki et al. (2024). This synergy builds stakeholder trust through transparency. However, financial constraints weaken this relationship, consistent with Habib et al. (2024) and Pourheidari (2010), suggesting that capital scarcity hinders long-term disclosure benefits. Conversely, the insignificant role of institutional ownership contradicts Khan (2024) and Bushee and Noe (2021), highlighting a passive monitoring environment. Finally, market competition reinforces the positive impact of reporting, supported by Pavlovic et al. (2023) and Khajavi et al. (2024), proving that competitive pressures drive firms toward sustainable performance.

6. Conclusion

This study concludes that integrated reporting is a vital driver of corporate financial sustainability, yet its efficacy is moderated by the firm's financial health and market environment. We confirm that while transparency stabilizes profitability (H1) and competitive markets amplify these gains (H4), acute financial constraints significantly hinder the sustainability benefits of reporting (H2). Interestingly, the rejection of H3 highlights a governance gap, where institutional owners do not effectively utilize integrated information to enhance firm value. Policymakers and managers should, therefore, focus on alleviating financial barriers and fostering competitive dynamics to maximize the utility of integrated reporting. Future research could explore why institutional governance remains ineffective in this specific reporting context.

Audit Quality

A Comprehensive Framework for Improving the Quality of Internal Audit Reports

Articles in Press, Accepted Manuscript, Available Online from 09 September 2026

https://doi.org/10.22054/qjma.2026.93480.2788

Ghassem Blue, Mohammad Marfou, Mohammad Taghi Taghavifard, Mozafar Jamaloianpour, Raheleh Satkin

Abstract Objective: The internal audit report is a critical communication link between the internal audit function and corporate governance bodies, including the audit committee, executive management, and the board of directors. Despite its strategic importance for audit effectiveness and organizational health, no comprehensive and systematic research has holistically addressed its quality dimensions, components, and indicators. A review of the literature reveals three fundamental gaps: fragmentation among existing research perspectives, the absence of a unified framework for measuring report quality, and the neglect of diverse stakeholder expectations in content development. To address these gaps, this study aims to provide a systematic framework for explaining the dimensions, components, and indicators of internal audit report quality in Iran.

Methodology: This developmental-applied research employed a systematic literature review. A comprehensive search was conducted across major databases, including Scopus, Web of Science, ScienceDirect, Emerald, Google Scholar, Wiley, ProQuest, the IIA website, SID, Magiran, and Civilica, covering January 2000 to December 2025. The search strategy used Persian and English keywords such as "internal audit report," "internal audit reporting," "audit reporting quality," and "improving audit communication." To ensure rigor, the review protocol was based on the SPIDER framework, suitable for qualitative research on concepts and indicators. The initial search identified 1,274 articles. After title and keyword screening, 1,093 unrelated articles were removed. Subsequently, 181 articles were reviewed at the abstract level, excluding 113. The full texts of 68 articles were thoroughly evaluated, leading to the exclusion of 17 sources due to unavailability, exclusive focus on process quality without addressing report characteristics, lack of objective indicators, content duplication, or lack of credibility. Ultimately, 51 eligible sources—including 44 research articles, 3 doctoral dissertations, and 2 reference books—were selected for final analysis. Given the qualitative nature of the extracted data and study heterogeneity, narrative synthesis was used to combine findings, supplemented by thematic analysis to enhance transparency and trustworthiness. The synthesis proceeded in three stages: a preliminary review described each study in terms of objectives, methodology, and key findings; open coding extracted every statement related to report quality and grouped similar codes into broader components; and finally, related components were aggregated into higher-level dimensions, forming the final multi-level conceptual framework.

Findings: The analysis revealed a comprehensive framework consisting of 51 indicators, 15 components, and four main dimensions. The first dimension, labeled "Qualitative Communication Characteristics," encompasses eight components. Accuracy and precision require content accuracy, precise vocabulary, numerical correctness, and traceable citation. Objectivity and impartiality demand reliance on factual evidence, immunity from relationships or pressures, and balanced presentation of relevant facts. Transparency and clarity involve logical flow, simple and unambiguous language, guiding headings, and sufficient supporting details. Conciseness means avoiding redundancy and repetition, focusing on key points, and summarizing without sacrificing completeness. Constructiveness entails a positive, professional, non-blaming tone; focus on practical solutions; forward-looking perspective; and balanced feedback on strengths and weaknesses. Completeness requires coverage of all audit objectives and areas, sufficient depth of analysis, mention of all significant considerations, and adaptation to audience needs. Timeliness involves appropriate timing based on issue importance, adherence to agreed deadlines, and currency of information. Readability and communicative effectiveness reduce cognitive load, enhance deep processing, and encourage stakeholder engagement and action.

The second dimension, "Structural Requirements," comprises two components. Mandatory content comprehensiveness includes stating objectives, scope, findings, priorities, recommendations, conclusions, and action plans; analyzing each finding based on criteria, conditions, root causes, impact, and priority; specifying responsible parties and deadlines; and disclosing scope limitations or non-compliance. Effective organization and formatting require adherence to organizational templates, logical hierarchical structure, clear information flow, and purposeful use of visual aids such as dashboards, heat maps, charts, and graphs.

The third dimension, "Stakeholder Alignment," includes two components. Audience appropriateness involves customizing detail levels and adjusting tone and language to the audience's knowledge and position. Professional balance and maintenance of role boundaries entail transparency regarding responsibility and limitations, providing advisory value without overstepping management prerogatives, maintaining independence by avoiding involvement in execution, and managing key stakeholder expectations.

The fourth dimension, "Informational and Strategic Value," consists of three components. Strategic focus on important issues requires intelligent prioritization to direct attention to high-impact areas and proportionality of analysis depth to issue significance. Relevance and entity specificity demand explicit linkage of findings to strategic objectives and risks, avoidance of clichés, and contextual, root-cause-driven analysis. Identification of macro trends involves horizontal integration of findings over time and across the organization, identifying and quantifying overarching patterns, and offering strategic, actionable recommendations at the macro level.

Conclusion: The proposed conceptual framework enables systematic assessment of internal audit report quality. It aligns with the IIA's mandatory professional standards and the classic Seven Cs of communication, while extending existing frameworks by incorporating two previously neglected dimensions: "Stakeholder Alignment" and "Informational and Strategic Value." However, empirical validation in the Iranian organizational context is essential before operational application. This framework serves as an initial theoretical basis for developing national internal audit reporting standards, designing measurement tools for future research, and revising internal audit practices in Iran.

Financial Accounting

Corporate Culture and Internal Control

Articles in Press, Accepted Manuscript, Available Online from 12 September 2026

https://doi.org/10.22054/qjma.2026.92627.2773

Vahid Mennati, Ahmadreza Moradi

Abstract 1. Introduction

Internal control is a central component of corporate governance because it supports reliable financial reporting, operational efficiency, asset protection, and compliance with laws and regulations. However, formal procedures are effective only when the organizational environment supports their implementation. Corporate culture shapes acceptable behavior, supervision, accountability, and compliance with established procedures. It may complement formal controls but can weaken them when trust and shared norms replace documentation, segregation of duties, and independent review.

This study examines the relationship between corporate culture and reported internal control weakness among firms listed on the Tehran Stock Exchange and Iran Fara Bourse. Corporate culture is analyzed through the Competing Values Framework, which distinguishes collaboration, control, competition, and creation cultures. The study addresses a gap in Iranian literature, where this relationship has mainly been examined through surveys. Combining textual analysis of board reports with auditor evidence provides an archival approach to cultural orientations and internal control outcomes.

2. Literature Review

Collaboration culture emphasizes trust, participation, teamwork, and internal cohesion. Excessive reliance on informal coordination may reduce attention to formal controls; therefore, the first hypothesis predicts a positive relationship between collaboration culture and internal control weakness. Control culture emphasizes stability, formal rules, documentation, and clear authority, leading to a predicted negative relationship. Competition culture focuses on performance targets, profitability, growth, and outperforming rivals. Such pressure may encourage employees to override controls; hence, a positive relationship is predicted. Creation culture emphasizes innovation, flexibility, decentralization, and risk-taking. When organizational change advances faster than control-system redesign, control procedures may become inadequate. Accordingly, a positive relationship between creation culture and internal control weakness is predicted.

3. Methodology

The study uses a quantitative, archival, and panel-data design. After applying the screening criteria, the final sample consists of 129 non-financial firms observed over Iranian fiscal years 1397–1402, approximately corresponding to 2018/19–2023/24, producing 774 firm-year observations.

Corporate culture is measured using annual board of directors’ activity reports. The reports were converted into searchable text through optical character recognition and preprocessed by standardizing Persian and Arabic characters, removing numbers and punctuation, correcting irregular spaces, and tokenizing the text. A localized dictionary was developed for each cultural dimension using prior international and Iranian studies and reviewed for consistency with Persian corporate reporting. For each firm-year, exact occurrences of words related to each dimension were counted and divided by total report words. The resulting ratios measure the intensity of collaboration, control, competition, and creation culture represented in corporate narratives. Thus, they capture culture disclosed in official reports rather than every informal aspect of actual organizational culture.

Internal control weakness is a binary variable derived from independent auditor and legal inspector reports. An observation is coded one when the report contains evidence attributable to deficiencies in the design or implementation of control procedures, and zero otherwise. Relevant evidence includes inadequate collection of receivables, missing supporting documentation, deficiencies in estimating provisions and costs, and weaknesses in recording, controlling, or reconciling accounts. Legal disputes, tax uncertainties, and events outside management’s control were excluded unless they reflected a specific control deficiency.

The empirical model includes the four cultural dimensions and control variables related to management changes, auditor characteristics, firm age, growth, industry concentration, profitability, size, leverage, operating volatility, cash flows, assets, book-to-market ratio, and loss history. Year and industry effects are included. Because diagnostic tests indicated heteroskedasticity and serial correlation, the final model was estimated using generalized least squares.

4. Results and Discussion

The descriptive results show that 36 percent of the observations contain at least one reported internal control weakness. Competition culture has the highest average textual score, followed by collaboration, creation, and control culture. Collaboration culture also displays greater dispersion than the other dimensions, indicating substantial differences in firms’ emphasis on participation, trust, relationships, and teamwork.

The regression results show that collaboration culture is positively and significantly associated with reported internal control weakness. In the model controlling for year and industry effects, its coefficient is 1.998, with a t-statistic of 2.698. The relationship remains positive and significant when year and industry effects are omitted. These results support the first hypothesis and indicate that greater narrative emphasis on collaboration, trust, and internal relationships is accompanied by a higher likelihood of auditor-reported control deficiencies.

A plausible explanation is that when interpersonal trust and informal relationships become dominant coordination mechanisms, firms may pay less attention to formal documentation, segregation of duties, independent verification, and systematic enforcement of procedures. Although collaborative values can improve commitment and information sharing, they may also reduce the independence and professional skepticism needed to identify, report, and correct control deficiencies.

The other cultural dimensions do not exhibit robust relationships with internal control weakness. Competition culture is insignificant in both specifications. Control culture is insignificant in the preferred model and becomes significant only when year and industry effects are excluded, indicating sensitivity to model specification. Creation culture is also insignificant in the preferred model, while its coefficient changes direction across specifications. Consequently, the second, third, and fourth hypotheses are not supported. Their consequences may instead depend on governance quality, managerial incentives, audit committee effectiveness, organizational complexity, and substantive implementation of formal procedures.

5. Conclusion

The findings show that corporate culture helps explain differences in reported internal control outcomes, but its effects vary across cultural dimensions. Collaboration culture is positively associated with internal control weakness, whereas control, competition, and creation cultures show no stable relationship. This result does not mean that collaboration is inherently harmful. Rather, it indicates that trust, participation, teamwork, and informal coordination cannot replace formal accountability, documentation, segregation of duties, and independent monitoring.

The findings have implications for boards, audit committees, internal auditors, and external auditors. Firms with strong collaborative environments should ensure that interpersonal trust is supported by documented procedures, appropriate segregation of duties, and effective independent review. Audit committees should prevent close relationships from discouraging employees from reporting deficiencies or challenging managerial decisions. External auditors may also consider textual indicators of culture as preliminary risk signals when planning control assessments.

The study contributes by integrating the Competing Values Framework, textual measurement of corporate culture, and auditor-reported internal control evidence in an emerging-market setting. It also provides an archival alternative to questionnaire-based research. Nevertheless, the findings indicate association rather than causality. Dictionary-based analysis cannot fully capture context, negation, or implicit meaning; board reports may portray a desired rather than actual culture; and the dependent variable reflects reported evidence rather than a comprehensive evaluation of the internal control system. Future studies may use contextual language models, alternative disclosures, survey validation, and governance or ownership moderators to clarify the mechanisms underlying these relationships.

Capital Structure

Economic Freedom and the Leverage Adjustment Speed

Articles in Press, Accepted Manuscript, Available Online from 13 September 2026

https://doi.org/10.22054/qjma.2026.93604.2784

Abas Aflatooni

Abstract Abstract

The speed of leverage adjustment is a central issue in capital structure research, yet the role of economic freedom in explaining this speed has received limited attention in the domestic literature. This study examines the effects of economic freedom and its components on firms’ leverage adjustment speed using data from 127 firms (2,813 firm-year observations) listed on the Tehran Stock Exchange during 2002–2024. The System Generalized Method of Moments (System GMM) is employed, controlling for year and industry effects. The results show that economic freedom significantly increases leverage adjustment speed. Except for government size, all components - including legal system and property rights, sound money, international trade freedom, and credit, labor, and business regulation - have positive and significant effects. Robustness tests confirm these findings. Overall, greater economic freedom facilitates adjustment toward target leverage by reducing institutional frictions and adjustment costs, supporting trade-off theory.

Keywords: Economic Freedom, Fraser Index, Heritage Index, Leverage Adjustment Speed, Trade-off Theory.

1. Introduction

The speed of leverage adjustment is a central concept in the capital structure literature. According to the dynamic trade-off theory, firms seek to maintain an optimal leverage ratio that balances the benefits and costs of debt financing. However, adjustment costs prevent firms from instantaneously reaching their target leverage, resulting in a gradual adjustment process. The speed at which firms move toward their target leverage reflects the efficiency of this process. In recent years, researchers have increasingly emphasized the role of institutional environments in shaping corporate financial decisions. Economic freedom, as a broad measure of institutional quality, reflects the extent to which economic activities are supported by secure property rights, sound monetary policies, open markets, and efficient regulations. Despite its potential importance, limited evidence exists on how economic freedom affects leverage adjustment, particularly in emerging economies. Therefore, this study investigates the impact of economic freedom and its components on the speed of leverage adjustment among firms listed on the Tehran Stock Exchange.

2. Literature Review

The dynamic trade-off theory suggests that firms continuously adjust their capital structures toward target leverage levels. Factors that reduce adjustment costs are expected to increase adjustment speed. Economic freedom can influence this process by improving legal protections, reducing regulatory barriers, enhancing monetary stability, and facilitating access to financial resources. Prior studies have highlighted the importance of institutional conditions in corporate financing decisions. Research by Ameer (2013), Fan et al. (2012), and Aflatooni et al. (2022) suggests that institutional quality and economic environments significantly affect firms’ financing behavior. However, evidence regarding the specific role of economic freedom in leverage adjustment remains limited. Accordingly, this study examines the overall effect of economic freedom and the effects of its five components: government size, legal system and property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor, and business. Based on the theoretical arguments and prior evidence, the following hypotheses are developed:

H1: Economic freedom positively affects the speed of leverage adjustment.

H2: Government size has a significant effect on the speed of leverage adjustment.

H3: Improvements in the legal system and property rights increase the speed of leverage adjustment.

H4: Greater access to sound money increases the speed of leverage adjustment.

H5: Greater freedom to trade internationally increases the speed of leverage adjustment.

H6: Better regulation of credit, labor, and business increases the speed of leverage adjustment.

3. Methodology

The study uses a sample of 127 firms listed on the Tehran Stock Exchange during 2002-2024, resulting in 2,813 firm-year observations. Firm-level data were obtained from financial statements and the Rahavard Novin database, while economic freedom data were collected from the Fraser Institute. The speed of leverage adjustment was estimated using a dynamic partial adjustment model. To address endogeneity concerns associated with dynamic panel models, the System Generalized Method of Moments (System GMM) estimator was employed. Year and industry effects were controlled for in all estimations. Book leverage was used as the primary measure of leverage. The models also included several control variables, including industry leverage, firm size, growth opportunities, profitability, asset tangibility, free cash flow, and capital expenditures. Robustness analyses were conducted using market leverage and the Heritage Foundation’s Economic Freedom Index.

4. Results

The findings indicate that firms gradually adjust their leverage toward target levels, supporting the dynamic trade-off theory. The results also show that economic freedom positively affects leverage adjustment speed, suggesting that firms operating in more economically free environments move more rapidly toward their target leverage. The analysis of individual components reveals that legal system and property rights, access to sound money, freedom to trade internationally, and regulation of credit, labor, and business all enhance adjustment speed, whereas government size has no significant effect. Robustness tests further confirm these findings. Similar results are obtained when market leverage and the Heritage Economic Freedom Index are used, indicating that the conclusions are robust to alternative measures of leverage and economic freedom.

5. Discussion

The findings support the view that institutional quality plays an important role in corporate financing decisions. From the perspective of the dynamic trade-off theory, economic freedom reduces institutional frictions and adjustment costs, enabling firms to move more efficiently toward their target capital structures. Economic freedom contributes to this process through stronger property rights, more effective legal systems, greater monetary stability, improved market access, and more efficient regulatory frameworks. These conditions facilitate financing activities and reduce the costs associated with capital structure adjustments. The results are consistent with prior studies emphasizing the role of institutional environments in corporate financial behavior, including Ameer (2013), Fan et al. (2012), and Aflatooni et al. (2022). The insignificant effect of government size suggests that the quality of institutions and market efficiency are more important than the scale of government involvement in explaining leverage adjustment dynamics.

6. Conclusion

This study examined the relationship between economic freedom and the speed of adjustment in an emerging market setting. The results indicate that economic freedom enhances firms’ ability to move toward target leverage. Among its components, legal system and property rights, sound money, freedom to trade internationally, and regulatory quality positively affect adjustment speed, whereas government size does not. The findings highlight the importance of institutional reforms aimed at strengthening property rights, promoting monetary stability, and reducing regulatory barriers. Such reforms can improve financing efficiency and facilitate capital structure adjustments. Future research may investigate the effects of economic shocks, such as the COVID-19 pandemic and economic sanctions, on leverage adjustment, as well as the roles of corporate governance, financial constraints, and economic uncertainty in shaping capital structure dynamics.

Financial Accounting

The Effect of Managers’ Personality characteristics and Ability on the Value Relevance of Accounting Information

Articles in Press, Accepted Manuscript, Available Online from 28 September 2026

https://doi.org/10.22054/qjma.2026.95170.2806

GHASSEM BLUE

Abstract Abstract

Purpose: Accounting information is among the most important sources of information required by capital markets for determining stock value. The relationship between accounting information and stock value or stock returns, referred to as the value relevance of accounting information, is influenced by various factors. Managers’ capabilities and personality characteristics are among these factors, and examining their effects on the value relevance of accounting information falls within the domain of behavioral accounting. Given the importance of this issue, this study investigates the impact of managerial ability and two managerial personality characteristics—overconfidence and narcissism—on the value relevance of accounting information in order to provide guidance for investors and accounting professionals.

Method: This study is applied in terms of purpose and descriptive-correlational in terms of its nature and methodology. Based on the type of data used, it is classified as an ex post facto study. The research period covers ten years, from the beginning of 1394 to the end of 1403.The sample consists of 139 companies listed on the Tehran Stock Exchange. Data were collected through library research and document analysis, and the research hypotheses were tested using multivariate linear regression models.

Findings: The results of hypothesis testing using multivariate linear regression models support all three research hypotheses at the 5% significance level. The findings related to the first hypothesis indicate that managerial ability has a significant effect on the value relevance of accounting information at the 95% confidence level. The results of the second hypothesis reveal that the personality characteristic of managerial narcissism has a significant impact on the value relevance of accounting information. Furthermore, the findings concerning the third hypothesis demonstrate that managerial overconfidence significantly affects the value relevance of accounting information at the 5% significance level.

Conclusion: Financial reports contain useful information for various stakeholders in making decisions, including investment decisions. Several criteria are available for evaluating the usefulness of accounting reports. The value relevance of accounting information, as one of the most important measures of its usefulness, is influenced by managers’ personality characteristics and abilities. Investors place greater confidence in the accounting information of firms managed by more capable executives when assessing corporate value. On the other hand, narcissistic managers may exploit their authority and information asymmetry to distort and manipulate financial reports, thereby producing and disclosing lower-quality information. Consequently, information disclosed by narcissistic managers exhibits lower value relevance and is considered less useful by investors in determining firm value. In addition, overconfident managers, due to their excessive self-confidence, tend to employ unrealistic and overly optimistic estimates and engage in aggressive accounting disclosures. Therefore, investors assign less weight to the accounting information of firms managed by such individuals when valuing companies and evaluating their shares, compared with firms managed by other executives. From the perspectives of agency theory and signaling theory, capable managers, unlike less capable managers, are able to use accounting information as a tool to reduce agency costs and improve the quality of decision-making. The analyses of this study indicate that capable managers improve future cash flows by allocating resources efficiently and selecting investment projects with rates of return higher than the cost of capital and convey this superior performance to the market through accounting components. Regarding narcissism, narcissistic managers, driven by a psychological need for social approval and the display of power, tend to use accounting information to create a positive halo effect around themselves and the company’s performance. This tendency leads to bias in financial reporting and the extensive use of earnings management to align reported performance with optimistic market expectations. From a theoretical perspective, such behavior causes accounting information to deviate from genuine signaling and move toward artificial signaling. Consequently, upon recognizing this behavioral risk, the market reduces the reliability of the information and weakens its value relevance by applying a higher discount rate or reducing the sensitivity of stock prices to earnings.



Furthermore, managerial overconfidence affects information quality through estimation bias. Overconfident managers are generally subject to systematic errors in their decision-making processes and forecasts and tend to underestimate the risks associated with investment projects.This phenomenon manifests in financial reporting through optimistic estimates of accounting items, such as provisions, fair values, and allowance for doubtful accounts. Such inaccuracies in estimates lead to higher rates of financial statement restatements and increased operational risk. From the perspective of capital markets, when investors are confronted with information that is highly likely to be subject to behavioral bias, the predictive value of such information declines. In fact, these behavioral characteristics, by creating uncertainty regarding the integrity and accuracy of financial reporting, prevent accounting information from properly reflecting the firm’s underlying value, thereby resulting in a gap between book value/earnings and market value.

Accounting and various aspects of finance

Examining the Impact of Aggressive Tax Reporting Quality on Financial Flexibility Considering the Moderating Role of Audit Committee Characteristics Quality

Articles in Press, Accepted Manuscript, Available Online from 14 October 2026

https://doi.org/10.22054/qjma.2026.92479.2769

Mohammadali Darvishidehnabad, Ali Namazian, Hadis Zeinali

Abstract 1. Introduction

In an increasingly uncertain and competitive economic environment, firms require appropriate financial policies to maintain their competitive position, respond to unexpected changes, and exploit investment opportunities. Financial flexibility is therefore an important financial characteristic because it enables firms to preserve financing capacity and respond to unforeseen financial needs. Tax payments, however, represent a significant cash outflow and may reduce the resources available for investment, debt management, and other financial commitments. Consequently, managers may employ tax planning strategies, including aggressive tax reporting, to reduce or defer tax payments and preserve financial resources. Aggressive tax reporting can therefore have a direct implication for financial flexibility. By lowering the current tax burden, firms may retain additional cash and increase their ability to finance operations and investment opportunities internally. Nevertheless, excessive tax aggressiveness may expose firms to tax penalties, regulatory scrutiny, reputational risks, and agency conflicts. In this regard, audit committees constitute an important internal corporate governance mechanism. Their independence, financial expertise, gender diversity, size, and meeting frequency may enhance monitoring over financial and tax-related decisions. A high-quality audit committee may therefore constrain excessively aggressive tax strategies and modify their effects on firms’ financial flexibility. The present study contributes to this literature by simultaneously examining aggressive tax reporting quality, financial flexibility, and audit committee characteristics quality within the institutional setting of the Tehran Stock Exchange.

2. Methodology

The research is applied in terms of purpose, ex post facto in terms of temporal design, and descriptive-correlational in terms of nature. The statistical population consists of companies listed on the Tehran Stock Exchange during 1392–1402 (2013–2023). Based on the specified sampling criteria, 147 companies were selected, resulting in 1,617 firm-year observations. Required data were extracted from the Codal comprehensive database, Rahavard Novin, companies’ financial statements, and their accompanying explanatory notes. Excel 2013 and EViews 9 were employed for data preparation and statistical analysis.

Because financial flexibility is operationalized as a binary variable, panel logistic regression estimated by the maximum likelihood method was employed. Financial flexibility was measured based on the firm’s excess debt capacity. A firm was classified as financially flexible when it exhibited excess debt capacity for at least two consecutive years. Aggressive tax reporting quality was constructed using four indicators: the difference between declared and final tax, the difference between the statutory and effective tax rates, the difference between the ratio of taxable income to sales and the industry profitability ratio, and earnings management aimed at income minimization. These four indicators were aggregated to construct the aggressive tax reporting quality index.

Audit committee characteristics quality was measured using five dimensions: audit committee independence, gender diversity, committee size, meeting frequency, and members’ financial expertise. These components were combined into an overall audit committee characteristics quality index. The regression models also controlled for audit quality, fixed-asset investment intensity, inventory investment intensity, return on assets, and corporate social responsibility.

3. Results

The descriptive findings indicate that the mean aggressive tax reporting quality index was 0.396, while its median was 0.374. The mean audit committee characteristics quality was 0.643, with a median of 0.495. Furthermore, 1,186 observations, equivalent to 73.35 percent of the sample, were classified as financially flexible, whereas 431 observations, or 26.65 percent, were classified as non-flexible.

The results of the first hypothesis indicate that aggressive tax reporting quality has a positive and statistically significant effect on financial flexibility. The estimated coefficient for aggressive tax reporting quality was 0.284, with a z-statistic of 3.50 and a significance level of 0.0005. Accordingly, the first hypothesis was supported. This finding suggests that more aggressive tax reporting can contribute to greater financial flexibility, primarily by reducing or postponing tax-related cash outflows and preserving financial resources within the firm. The second hypothesis examined the moderating role of audit committee characteristics quality. The interaction coefficient between aggressive tax reporting quality and audit committee characteristics quality was 0.118 and statistically significant, with a z-statistic of 2.31 and a significance level of 0.0207. Although the interaction term is positive, comparison of the interaction effect with the direct coefficient of aggressive tax reporting indicates that stronger audit committee characteristics reduce the magnitude of the positive effect of aggressive tax reporting on financial flexibility. Thus, the second hypothesis was supported. The second model also produced a McFadden R² of 0.268, compared with 0.214 for the first model.

4. Discussion

The positive relationship between aggressive tax reporting quality and financial flexibility can be explained by the cash-flow consequences of taxation. When firms reduce or defer tax payments through aggressive tax planning and reporting practices, more cash remains available for operating requirements, debt obligations, and investment opportunities. Therefore, aggressive tax reporting may improve short-term financial flexibility by increasing internally available financial resources. However, this benefit should not be interpreted as an absence of risk because excessive tax aggressiveness can generate tax disputes, penalties, reputational costs, and other future financial consequences. The findings also demonstrate the importance of audit committee characteristics as a corporate governance mechanism. An audit committee with greater independence, financial expertise, appropriate size, gender diversity, and more frequent meetings can exercise stronger oversight over financial and tax decisions. Such monitoring can constrain excessive tax aggressiveness and prevent management from relying excessively on tax strategies merely to obtain short-term liquidity benefits. Consequently, although aggressive tax reporting may improve financial flexibility, effective audit committee oversight can moderate and reduce the strength of this relationship. The findings are consistent with the broader evidence discussed in the study concerning the role of corporate governance and audit committee characteristics in constraining aggressive tax behavior.

5. Conclusion

The study concludes that aggressive tax reporting quality is positively and significantly associated with financial flexibility among firms listed on the Tehran Stock Exchange. This finding indicates that tax-related strategies capable of reducing or postponing cash tax payments can provide firms with additional financial resources and thereby enhance their ability to respond to financial needs. At the same time, the results confirm that audit committee characteristics quality significantly moderates this relationship. Higher-quality audit committees can limit excessive reliance on aggressive tax strategies and establish a balance between the short-term financial benefits of tax reduction and the long-term requirements of transparency, accountability, and tax-risk management. From a managerial perspective, firms should not evaluate tax strategies solely on the basis of short-term tax savings. Instead, managers should consider their effects on liquidity, financing capacity, borrowing capacity, tax risk, and long-term financial flexibility. Boards of directors should also give greater attention to the independence, financial and accounting expertise, professional experience, gender diversity, and monitoring capacity of audit committee members. Strengthening the audit committee and enhancing coordination among financial management, internal audit, and the audit committee can improve oversight of tax policies and help ensure that aggressive tax strategies are implemented within an appropriate risk-management framework. Overall, the evidence suggests that tax reporting behavior is not merely a tax-related issue but an important component of corporate financial policy and corporate governance.

Financial Accounting

The Impact of the U.S. Withdrawal from the JCPOA as a Geopolitical Event on Conditional Conservatism: Evidence from the Role of State Ownership and Financial Constraints

Articles in Press, Accepted Manuscript, Available Online from 18 October 2026

https://doi.org/10.22054/qjma.2026.93452.2781

Amin Pourrezaei Nav, Hamzeh Didar, Gholamreza Mansourfar

Abstract Abstract

This study examines the impact of the U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) as a geopolitical event on conditional conservatism and investigates the roles of state ownership and financial constraints in explaining cross-sectional differences in firms’ responses to this event. To this end, a difference-in-differences approach is employed by comparing firms’ behavior during the three-year period before and the three-year period after the event. The sample consists of 168 firms and 1,008 firm-year observations. The results indicate that the U.S. withdrawal from the JCPOA is associated with a significant increase in conditional conservatism. Further analyses across different time horizons reveal that firms’ responses emerged gradually, with the medium-term effect being stronger than the short-term effect. The largest increase in conditional conservatism is observed in the years following the event. The findings also show that the effect of the JCPOA withdrawal is weaker among state-owned firms but stronger among financially constrained firms.

Keywords: Conditional Conservatism, U.S. Withdrawal from the JCPOA Geopolitical Event, State Ownership, Financial Constraints, Difference-in-Differences.

1. Introduction

Geopolitical events have increasingly become an important source of uncertainty for firms, affecting investment decisions, financing conditions, risk perceptions, and corporate reporting behavior. Prior accounting research suggests that heightened uncertainty can alter managers’ reporting incentives and increase stakeholders’ demand for timely recognition of economic losses (Watts, 2003; LaFond & Watts, 2008). Conditional conservatism, which refers to the asymmetric and timelier recognition of bad news relative to good news, is often viewed as an efficient reporting mechanism that mitigates information asymmetry, enhances contracting efficiency, and reduces agency conflicts. The U.S. withdrawal from the Joint Comprehensive Plan of Action (JCPOA) in 2018 represents a major geopolitical shock for Iranian firms. Through its effects on economic uncertainty, financing conditions, trade relations, exchange rate volatility, and inflationary pressures, this event created an environment in which the demand for conservative financial reporting may have changed substantially. While prior studies have examined the economic consequences of geopolitical risk, limited evidence exists regarding its impact on accounting conservatism, particularly in emerging markets. This study investigates whether the U.S. withdrawal from the JCPOA affected firms’ conditional conservatism and whether this effect varies across firms with different institutional and financial characteristics. Specifically, the study examines the moderating roles of state ownership and financial constraints. Furthermore, unlike prior studies that focus solely on average treatment effects, this study evaluates both short-term and medium-term responses to identify how firms’ reporting behavior evolves over time following a geopolitical shock.

Research Hypotheses

H1: The U.S. withdrawal from the JCPOA increases firms’ conditional conservatism.

H2: The effect of the U.S. withdrawal from the JCPOA on conditional conservatism is weaker among state-owned firms.

H3: The effect of the U.S. withdrawal from the JCPOA on conditional conservatism is stronger among financially constrained firms.

2. Literature Review

Conditional conservatism is primarily grounded in contracting, information asymmetry, and agency theories. Prior research suggests that conservatism enhances contracting efficiency by facilitating timely loss recognition and reducing information asymmetry between managers and external stakeholders (Watts, 2003; LaFond & Watts, 2008). Geopolitical events can increase uncertainty, financing frictions, and default risk, thereby strengthening demand for more conservative financial reporting. However, firms may respond differently to such shocks. State-owned firms often benefit from government support and easier access to financing, reducing incentives to increase conservatism, whereas financially constrained firms face stronger creditor pressure and greater information asymmetry, making conservative reporting more valuable. Nevertheless, agency theory suggests that managers under severe financial pressure may delay the recognition of bad news to avoid adverse economic consequences. Therefore, the overall effect of geopolitical shocks on conditional conservatism remains an empirical issue.

3. Methodology

This study employs a quasi-experimental research design based on a difference-in-differences (DiD) approach. The research setting is built around the U.S. withdrawal from the JCPOA in 2018, which serves as an exogenous geopolitical shock affecting Iranian firms. The analysis compares firms’ reporting behavior during the three-year period before the event (2015-2017) and the three-year period after the event (2018-2020). This design allows the study to isolate changes in conditional conservatism associated with the geopolitical event while controlling for time-invariant firm characteristics. The final sample consists of 168 firms and 1,008 firm-year observations. Financial institutions, banks, leasing companies, and other regulated financial firms are excluded because of their distinct reporting environments. All sample firms remained listed throughout the event window and had a fiscal year ending on Esfand 29 in the Iranian calendar. In addition to the baseline DiD model, dynamic specifications are estimated to examine short-term and medium-term effects. These analyses allow the study to determine whether firms’ responses emerged immediately after the event or evolved gradually over time. Firm fixed effects and clustered standard errors are employed to address potential econometric concerns. Furthermore, several supplementary analyses, including pre-trend examinations, are conducted to validate the identification strategy and assess the parallel trends assumption.

4. Results and Discussion

The findings indicate that the U.S. withdrawal from the JCPOA significantly increased firms’ conditional conservatism, consistent with contracting and information asymmetry theories. Dynamic analyses show that the effect emerged gradually, strengthened during the first two years after the event, and weakened thereafter, suggesting that firms responded not only to the initial geopolitical shock but also to its evolving economic consequences. The results further reveal considerable cross-sectional variation. The increase in conditional conservatism is weaker among state-owned firms, with the buffering role of state ownership becoming more evident over time. In contrast, financially constrained firms exhibit a stronger and progressively increasing response, indicating a greater reliance on conservative reporting to mitigate creditor concerns and information asymmetry under persistent economic pressures. Additional robustness and pre-trend tests support the validity of the findings and the parallel trends assumption.

5. Conclusion

This study examines the effect of the U.S. withdrawal from the JCPOA on firms’ conditional conservatism using a difference-in-differences framework. The findings indicate that geopolitical shocks can significantly influence financial reporting behavior by increasing firms’ incentives to recognize bad news more promptly. The study contributes to the literature in several ways. First, it extends the growing literature on geopolitical risk by documenting its impact on accounting conservatism. Second, it highlights the importance of firm heterogeneity by demonstrating that state ownership and financial constraints shape firms’ reporting responses to geopolitical events. Third, by distinguishing between short-term and medium-term effects, the study provides new evidence on the temporal dynamics of accounting responses to major political and economic shocks. Overall, the findings suggest that the financial reporting consequences of geopolitical events are not uniform across firms or over time. Instead, they depend on firms’ institutional environments, financing conditions, and ability to absorb economic uncertainty. These insights are particularly relevant for investors, creditors, regulators, and policymakers operating in environments characterized by elevated geopolitical risk.

Accounting and various aspects of finance

Evaluating managers' asymmetric behavior in marketing budget allocation

Articles in Press, Accepted Manuscript, Available Online from 28 October 2026

https://doi.org/10.22054/qjma.2026.93968.2797

Mohammad Hossein Setayesh, marzieh yousefinezhad, Mozhdeh Zare

Abstract 1. Introduction

Traditional management accounting frameworks have long assumed a linear and symmetric association between operating revenues and expenditure adjustments. Under this mechanical view, costs are expected to adjust uniformly and proportionally in response to shifts in firm sales volume. However, seminal empirical contributions challenge this premise by establishing that managerial cost commitments are subject to psychological biases, resource adjustment frictions, and asymmetric agency costs. When sales decline, corporate decision-makers frequently postpone resource reduction due to optimistic future demand projections or the prohibitively high disposal and re-acquisition expenses associated with operational inputs. Conversely, when product demand accelerates, managers expand resources more promptly, creating the widespread empirical phenomenon known as cost stickiness.

While extensive research has investigated aggregate selling, general, and administrative (SG&A) expenses, discrete expenditure subcomponents—specifically marketing and promotional investments—exhibit unique strategic properties. Marketing costs represent strategic outlays aimed at establishing market presence, preserving customer loyalty, and defending market share in volatile emerging economies. In the context of the Tehran Stock Exchange (TSE), macroeconomic shocks, systemic inflationary pressures, and severe supply-chain constraints exert profound influences on marketing expenditure flexibility. Consequently, applying rigid linear models or binary switching formulations risks respecifying the underlying economic dynamics. This study addresses this limitation by deploying a continuous non-linear regime-switching econometric approach.

Research Question(s)

Do marketing expenditures of firms listed on the Tehran Stock Exchange exhibit non-linear and asymmetric adjustment patterns across different sales variation regimes?

Does the Panel Smooth Transition Regression (PSTR) framework identify an endogenous threshold and dynamic transition path for marketing cost elasticities in Iran’s capital market?



2. Literature Review

The theoretical exploration of cost stickiness originated from resource adjustment theory and organizational decision-making models. Anderson, Banker, and Janakiraman (2003) demonstrated that operational expenditures increase more with activity expansion than they decrease with equivalent activity contractions, conceptualizing cost asymmetry as the direct product of deliberate managerial choices rather than purely mechanical relationships. In the Iranian empirical accounting literature, foundational inquiries into cost behavior verified the presence of cost stickiness across manufacturing sectors. Ghaemi and Nematollahi (2006) investigated the behavior of distribution and sales expenditures among firms listed on the Tehran Stock Exchange, documenting that sales-related expenditures expand vigorously during sales upturns but experience significant stickiness when sales decline. In a subsequent study on non-operating and operating overhead adjustments, Asadi and Beigpanahi (2017) highlighted that managerial decisions regarding cost reallocation remain contingent upon market uncertainty, financial leverage, and prevailing macroeconomic expectations.

2.1. The Non-Linear Transition Mechanism

Despite the empirical validity of piece-wise linear specifications, standard binary models assume an instantaneous and knife-edge transition between cost regimes. In actual business operations, managerial adjustments are gradual and heterogeneous across industrial sectors. González, Teräsvirta, and van Dijk (2005) introduced the Panel Smooth Transition Regression (PSTR) model to resolve these structural limitations by allowing parameter elasticities to shift smoothly and continuously as a bounded function of an observable transition metric.

3. Methodology

To capture structural nonlinearities and parameter heterogeneity without imposing arbitrary regime categorizations, we formulate a two-regime PSTR specification:

Δ ln⁡〖〖"MC" 〗_it 〗=μ_i+β_0 Δ ln⁡〖〖"Sales" 〗_it 〗+β_1 Δ ln⁡〖〖"Sales" 〗_it 〗⋅g(q_itⓜ;γⓜ;c)+θ^' X_it+ε_it

where Δ ln⁡〖〖"MC" 〗_it 〗 denotes the log-difference of marketing expenditures for a firm i in year t; Δ ln⁡〖〖"Sales" 〗_it 〗 captures the contemporaneous log-difference in gross revenues; μ_i represents individual firm fixed effects; X_it is a vector of control variables, including financial leverage (LEV) and asset intensity (ASINT); and ε_it is the idiosyncratic error term.

The transition function g(q_itⓜ;γⓜ;c) is continuous, bounded within the interval [0ⓜ,1], and defined as a standard logistic transition function:

g(q_itⓜ;γⓜ;c)=[1+exp⁡(-γ(q_it-c)) ]^(-1), γ>0

where q_it serves as the normalized transition variable (sales growth metric), c denotes the endogenous location/threshold parameter, and γ represents the slope parameter determining the smoothness and velocity of transition between regimes.

The empirical sample comprises 142 industrial firms listed on the Tehran Stock Exchange observed over a ten-year horizon (2015–2024), yielding a balanced panel of 1420 firm-year observations. Financial institutions, holding companies, and firms with non-continuous trading activity or missing disclosure metrics were excluded.



4. Results

Prior to estimating the core structural equations, linearity tests were evaluated to examine the null hypothesis of linearity against the alternative of a smooth transition mechanism. The test statistics rejected linearity at the p<0.01 level, confirming the necessity of a non-linear PSTR formulation.

Table 1 presents the parameter estimates for the PSTR marketing cost model.

Table 1. PSTR Model Estimates for Marketing Expenditures (1394–1403)

Parameter / Variable Estimated Coefficient Standard Error t-Statistic p-Value

Linear Elasticity (β_0) 0.219 0.054 4.055 0.000

Non-Linear Elasticity (β_1) 0.317 0.071 4.465 0.000

Transition Parameter (γ) 5777.9 824.1 7.011 0.000

Threshold Value (c) 1.757 0.890 1.974 0.048

Control: Leverage (LEV) -0.142 0.041 -3.463 0.001

Control: Asset Intensity (ASINT) 0.088 0.029 3.034 0.002



As detailed in Table 1, the baseline elasticity in the lower regime is β_0=0.219. Above the identified threshold parameter (c=1.757), the additional sensitivity parameter is β_1=0.317. Consequently, the total dynamic elasticity in the upper regime reaches β_0+β_1=0.536. The large magnitude of the slope parameter (γ=5777.9) demonstrates a rapid, steep transition between regimes, while remaining structurally continuous across firms.

5. Discussion

The empirical results confirm that marketing cost adjustment in emerging capital markets is characterized by dynamic threshold asymmetry. In the lower regime, firms exhibit restrained marketing adjustments (β_0=0.219), indicating that during periods of stagnant or declining sales, marketing allocations are preserved as defensive mechanisms to sustain brand visibility. Conversely, in the upper regime, marketing elasticity increases significantly to 0.536, confirming that corporate executives deploy aggressive marketing allocations during periods of robust revenue expansion.

These findings directly corroborate the empirical literature on non-linear operational behavior. Consistent with the foundational findings of Ghaemi and Nematollahi (2006), marketing and distribution costs show strong asymmetry under shifting revenue trajectories. Furthermore, our findings align with Asadi and Beigpanahi (2017), who demonstrated that managerial resource adjustments are fundamentally dictated by capacity utilization and revenue expectations. By introducing the continuous PSTR framework, our study extends their empirical conclusions by capturing exact regime distribution (35 versus 1385 observations) and verifying continuous elasticity gradients across Iranian firms.

6. Conclusion

This study provides empirical evidence on the non-linear and asymmetric behavior of marketing expenditures among Tehran Stock Exchange firms. Utilizing the PSTR framework across the 1394–1403 period, we show that traditional linear specifications obscure key dynamics of cost flexibility. Marketing cost behavior operates across distinct regimes, characterized by an endogenous threshold (c=1.757) and a dynamic elasticity range spanning from 0.219 to 0.536.

These insights offer practical implications for corporate financial analysts, auditors, and executive management. Recognizing non-linear cost adjustments enables market participants to benchmark marketing investment efficiency more accurately against revenue volatility. Future research may expand upon this investigation by evaluating industry-specific threshold differences and exploring the moderating effects of corporate governance and financing constraints.

Accounting and various aspects of finance

Risk Hedging and Corporate Future Investment: Empirical Evidence from the Iranian Capital Market

Articles in Press, Accepted Manuscript, Available Online from 28 October 2026

https://doi.org/10.22054/qjma.2026.90992.2752

Abdolrasoul Mostajeran, fateme asgari

Abstract Abstract

This study examines the effect of optimal risk hedging on corporate future investment and investigates the moderating roles of financial leverage, intensified economic sanctions, and industry volatility. The study is based on the premise that cash-flow volatility and external economic shocks may weaken firms’ financing capacity, increase underinvestment, and delay capital expenditure. Appropriate hedging can reduce financial uncertainty and protect the resources required for future investment. Using a quantitative and empirical research design, the study analyzes panel data from 120 non-financial firms listed on the Tehran Stock Exchange during 2016–2023. Optimal hedging is estimated using a variance-minimization approach. The empirical models are estimated using fixed-effects regression and the generalized method of moments to control for unobservable heterogeneity and potential endogeneity. The findings show that optimal risk hedging has a positive and statistically significant effect on future investment. However, financial leverage weakens this relationship, indicating that debt obligations and financing constraints may reduce the investment benefits of hedging. The moderating effect of intensified sanctions is not statistically significant, suggesting that firm-level hedging cannot fully offset broad macroeconomic and institutional restrictions. In contrast, the positive effect of hedging is stronger in industries characterized by higher volatility. The study contributes to the literature by providing evidence from an emerging market exposed to economic instability, financing constraints, and international restrictions. The findings indicate that risk management can support investment efficiency, particularly when firms operate in volatile industries and maintain sufficient financial flexibility.

Keywords

Optimal risk hedging, future investment, financial leverage, sanctions, industry volatility, corporate risk management.

Introduction

Corporate investment is essential for long-term growth, productivity, and value creation. However, firms make investment decisions under uncertainty. Revenue fluctuations, exchange-rate instability, financing constraints, and external economic shocks may reduce internal funds and increase the cost of external financing. Consequently, firms may postpone profitable projects or invest less than their optimal level.

Risk hedging may alleviate these problems by stabilizing cash flows and improving the predictability of future financial resources. When the hedging ratio is close to its optimal level, firms may preserve their investment capacity and respond more effectively to profitable opportunities. This issue is particularly important in Iran, where firms operate in an environment characterized by macroeconomic instability, financing limitations, and economic sanctions. Accordingly, this study examines whether optimal risk hedging affects future investment among non-financial firms listed on the Tehran Stock Exchange. It also investigates whether financial leverage, intensified sanctions, and industry volatility change the strength of this relationship.

Literature Review

The theoretical framework is based on agency theory, information asymmetry, real-options theory, and Tobin’s Q. Agency theory suggests that uncertainty and weak monitoring may cause managers to postpone investment or allocate resources inefficiently. Hedging may reduce uncertainty and improve the alignment between managerial decisions and shareholders’ interests.

From the information-asymmetry perspective, unstable cash flows increase the risk perceived by lenders and investors and may raise external financing costs. By reducing cash-flow volatility, hedging can improve financial predictability and facilitate access to funds. Real-options theory emphasizes that uncertainty affects the timing of investment. Excessive uncertainty may encourage firms to delay investment, whereas effective risk management can reduce uncertainty and support the implementation of valuable projects. Tobin’s Q further indicates that firms with stronger growth opportunities are expected to invest more, provided that financing constraints do not prevent them from doing so.

Although previous studies have examined the relationship between hedging, financing constraints, and investment, limited evidence exists regarding real investment in Iran. In particular, the moderating effects of sanctions and industry volatility have received insufficient attention. This study addresses these gaps by combining an optimal hedging measure with panel-data methods designed to reduce endogeneity concerns.

Methodology

This quantitative and empirical study examines 120 non-financial firms listed on the Tehran Stock Exchange during 2016–2023. The dependent variable is future corporate investment, measured through investment activity and capital expenditure. The main explanatory variable is optimal risk hedging, estimated using a variance-minimization approach. Financial leverage, intensified sanctions, and industry volatility are considered moderating variables. Profitability, free cash flow, firm size, growth, and Tobin’s Q are included as control variables.

Panel-data methods are used to estimate the relationships. The fixed-effects model controls for unobservable characteristics that remain constant within firms over time. The generalized method of moments is also applied to address possible reverse causality and other endogeneity problems. The statistical analysis includes descriptive statistics, the Jarque–Bera normality test, the Fisher augmented Dickey–Fuller stationarity test, Pearson correlation analysis, and variance inflation factors. The reported results show that the variables are stationary. The highest variance inflation factors for firm size and return on assets are 5.515 and 5.692, respectively, while the strongest reported correlation is between return on assets and leverage, equal to −0.587.



Results and Discussion

The findings show that optimal risk hedging has a positive and statistically significant effect on future investment. This result indicates that firms reducing cash-flow uncertainty are better able to preserve financial resources and undertake future capital expenditure. The finding is consistent with the financing-constraint perspective, according to which stable cash flows reduce the likelihood that profitable investment opportunities will be postponed because of insufficient internal funds. Financial leverage negatively moderates the relationship between hedging and future investment. In highly leveraged firms, the benefits of hedging may be limited by debt-service requirements, restrictive loan covenants, and creditors’ claims. Therefore, the ability of hedging to support investment decreases as financial obligations increase. The moderating effect of intensified sanctions is not statistically significant. This finding suggests that sanctions influence firms through broad economic and institutional channels that cannot be completely neutralized by firm-level hedging. Restrictions on trade, foreign exchange, technology, financing, and international transactions may continue to constrain investment despite the adoption of risk-management strategies.

The positive effect of hedging is stronger in industries with higher volatility. This result demonstrates that the value of hedging depends on the firm’s operating environment. In volatile industries, stabilizing cash flows is more important because uncertainty poses a greater threat to investment planning. The reported model has an R^{2}of 0.463346, an adjusted R^{2}of 0.458831, an F-statistic of 102.6363, and a Durbin–Watson statistic of 1.557215. Return on assets has a positive and significant coefficient of 0.200817 with a probability value of 0.0000. Free cash flow has a negative and significant coefficient of −0.407743 with a probability value of 0.0000. Firm size has a positive and significant effect, whereas growth and Tobin’s Q do not show strong statistical significance in the reported model.

Conclusion

The study concludes that optimal risk hedging significantly supports future corporate investment among non-financial firms listed on the Tehran Stock Exchange. By reducing financial uncertainty and stabilizing cash flows, hedging may improve firms’ ability to finance future projects. Nevertheless, this effect is conditional. High financial leverage weakens the investment benefits of hedging, while industry volatility strengthens them. The insignificant effect of sanctions indicates that firm-level hedging alone cannot overcome extensive macroeconomic and institutional restrictions.

The findings suggest that financial managers should develop hedging strategies according to firms’ financial capacity, debt structure, and industry conditions. Policymakers should improve derivative-market infrastructure and facilitate firms’ access to risk-management instruments. Future research may use alternative measures of hedging, examine different categories of sanctions, and analyze sector-specific investment behavior over longer periods.

Rating Iranian Banks According to their Financial Strength

Volume 14, Issue 54, Summer 2017, Pages 25-50

https://doi.org/10.22054/qjma.2018.8268

Mohammad Javad Salim, Jafar Babajani, Abolfazl Jafari

Abstract One of the essential needs of Iranian financial market participants (including money market and capital market participants) is rating Iranian banks based on their financial strength. This rating helps stakeholders, including shareholders, investors, customers, central bank and etc., to obtain more accurate information regarding inherent safety and soundness of Iranian banks. The aim of this study is rating Iranian banks, based on financial strength, specifically those listed on the Tehran Stock Exchange (TSE) and Iran OTC market. All the banks were separated into two groups of privatized and non-governmental banks. The period of the research is 5 years from 2012 to 2016. For this purpose, first a financial strength score was determined for each of the banks using a reflective component-based model which includes 4 dimensions, 8 factors and 51 indicators, Then the banks were ranked based on their financial strength scores in two separate groups of privatized and non-governmental banks. The results show that privatized banks compared with non-governmental banks have higher financial strength scores. In the group of privatized banks, Mellat Bank had the highest score and hence the highest rank in terms of financial strength. In the group of non-governmental banks, Pasargad Bank, EN Bank and Parsian Bank, respectively had the highest scores and hence the highest ranks in terms of financial strength.

Accounting and various aspects of finance

The Impact of CEO’s Overconfidence on the Relationship between Cash Holdings and Excess

Volume 18, Issue 72, Winter 2022, Pages 57-77

https://doi.org/10.22054/qjma.2021.51016.2139

Mohammad Ali Aghaei, Mohammad Amri Asrami

Abstract In this study, the impact of CEO’s overconfidence on the relationship between cash holding and excess returns is investigated in companies listed in Tehran Stock Exchange during the years 2011-2018. For CEO’s overconfidence, overinvestment in assets, and for excess returns, the difference between a firm’s stock return and the return of the firm’s benchmark portfolio over the same period is used. By systematic sampling, a sample of 157 companies is selected, and the models have run based on panel data with fixed effects. The results have shown that (1) cash holding has a positive and significant impact on excess returns, (2) CEO’s overconfidence has a negative and significant impact on excess returns, and lastly, (3) CEO’s overconfidence has a negative and significant impact on the relationship between cash holdings and the excess returns. With increasing CEO’s overconfidence, the excess returns will be reduced. Overconfident managers keep cash at a higher level that leads to overinvestment. It consequently decreases excess returns.

The Relationship between Real Earnings Management and Accrual Earnings Management in Companies Suspected of Fraud Listed in Tehran Stock Exchange

Volume 13, Issue 49, Spring 2016, Pages 29-52

https://doi.org/10.22054/qjma.2016.4193

B Mashayekhi, A. H. Hosseinpour

Abstract Abstract
Most of earnings management researches in Iran focus on abnormal accruals. Whereas accruals and real activities result in earnings management, which are complementary (Sanjaya and Saragih, 2012). According to various studies, accruals eventually lead to fraud (Jones et al, 2008). So far no research studied the relationship between accrual earnings management and real earnings management in companies suspected to fraud. So, in this study, the relationship between accrual earnings management and real Earnings management in companies suspected to fraud are discussed. In this analysis, panel data is used. For hypothesis testing, the data of 107 listed companies on Tehran Stock Exchange, which are suspected to fraud, for the period of 1392- 1387 (Solar Calendar), has been used. Results of the analysis indicate that real earnings management on accrual earnings management in companies suspected to fraud, at 95 percent confidence level, have negative and significant correlation. As a result, researchers, standard settings and auditors should pay attention to both real earnings management and accrual earnings management in fraud suspected companies. Audit quality should also be strengthened in the Iranian suspected of fraud listed companies

Investigating the Impacts of Voluntary Disclosure Level on the Information Asymmetry of the Companies Listed in Tehran Stock Exchange

Volume 11, Issue 42, Summer 2014, Pages 89-114

Abstract Managers venture to voluntary disclosure to inform investors about firms’ future point of views, goals and strategies. Financial and non-financial voluntary information reduce information asymmetry, increase stock liquidity and improve financial stability. In this research the relation of voluntary disclosure level and information asymmetry of listed companies of Tehran Stock Exchange is investigated. Botosan (1997) check list which has been adjusted by kashanipour and et al. (2009) was utilized to measure voluntary disclosure level. The check list consists of 71 indices through six section of background information, the summery of historical results, Key Non-Financial Statistics, Segments Information, Projected Information and Management Discussion and Analysis. Moreover, information asymmetry variable is measured by using Venkatash and Chiang (1986) model. To test research hypotheses multivariate regression with panel data is utilized. The results show that there is no significant relation between voluntary disclosure level and information asymmetry of 122 listed companies of Tehran Stock Exchange during 2003-2011.
 
Keywords: Voluntary disclosure level, Information asymmetry, Liquidity, Capital market.
 
 
 
 
 
 
Managers venture to voluntary disclosure to inform investors about firms’ future point of views, goals and strategies. Financial and non-financial voluntary information reduce information asymmetry, increase stock liquidity and improve financial stability. In this research the relation of voluntary disclosure level and information asymmetry of listed companies of Tehran Stock Exchange is investigated. Botosan (1997) check list which has been adjusted by kashanipour and et al. (2009) was utilized to measure voluntary disclosure level. The check list consists of 71 indices through six section of background information, the summery of historical results, Key Non-Financial Statistics, Segments Information, Projected Information and Management Discussion and Analysis. Moreover, information asymmetry variable is measured by using Venkatash and Chiang (1986) model. To test research hypotheses multivariate regression with panel data is utilized. The results show that there is no significant relation between voluntary disclosure level and information asymmetry of 122 listed companies of Tehran Stock Exchange during 2003-2011.
 
Keywords: Voluntary disclosure level, Information asymmetry, Liquidity, Capital market.
 
 
 
 
 
In this research effect of extreme and moderate cash flows in explanatory power of model when the earnings are extreme is investigated through the extended version of Easton and Harris model. In this study in period of 1385 to 1391 we had 665 firm-year observations that after the removal of outliers we reach to 594 observations. We use OLS regression that in this regression we confront with unbalanced panel data with random effect. For classification of earnings and cash flows to extreme and moderate we use quintiles. Likewise, for comparing explanatory power of the models we use Cramer's (1987) Z-statistic. After all, with attention to statistic of this test we conclude that moderate cash flows relative to extreme cash flows when the earnings are extreme have effectson explanatory power.
 
Keywords: Extreme Earnings, Moderate and Extreme Cash Flows from operation, Explanatory Power.
 
 
 
 
 
 
In this research effect of extreme and moderate cash flows in explanatory power of model when the earnings are extreme is investigated through the extended version of Easton and Harris model. In this study in period of 1385 to 1391 we had 665 firm-year observations that after the removal of outliers we reach to 594 observations. We use OLS regression that in this regression we confront with unbalanced panel data with random effect. For classification of earnings and cash flows to extreme and moderate we use quintiles. Likewise, for comparing explanatory power of the models we use Cramer's (1987) Z-statistic. After all, with attention to statistic of this test we conclude that moderate cash flows relative to extreme cash flows when the earnings are extreme have effectson explanatory power.
 
Keywords: Extreme Earnings, Moderate and Extreme Cash Flows from operation, Explanatory Power.
 
 
 
 
 
 
 
 
 
 
 

The Impact of Intellectual Capital on Financial Performance of Companies Listed in TSE

Volume 11, Issue 41, Spring 2014, Pages 83-103

Gholamhossein Asadi, Mariya Yokhneh Alghiaee

Abstract A great change and shift from financial resources to knowledge is being experienced nowadays. Physical and financial assets are essential but not enough to reach organizational goals, instead, knowledge, technological settings, good customer relations, information systems,... those constitute organization’s Intellectual Capital, are known as key success factors in information era. It’s believed that intellectual capital, including human capital and structural capital, has important and growing role in firm’s performance and affects on it’s financial achievements. This paper examines the effect of intellectual capital and it’s components on firm’s financial performance. The essential data are taken from 1383 -1388 fiscal years’ annual reports of publicly traded firms listed on the Tehran stock exchange and 816 firm-years are studied. Results of hypotheses testing show that, VAIC has positive effect on the four financial performance indicators. Between VAIC components, capital employed efficiency has the most effect on firms’ financial performance.

The Concept of Materiality in Auditing and its Impact on Auditors Opinion

Volume 1, Issue 2, Summer 2003, Pages 1-38

Yahya Hassas Yeganeh, Hosseyn Kasyri

Abstract Materiality is one of the comprehensive concepts in accounting and auditing which is used by one definition but different applications. Information is material if its omission or misstatement could influence or change the decisions or Judgments of a reasonable user taken on the basis of financial statements. As auditing standards, auditors should consider materiality and its relationship with audit risk when conducting an audit. For materiality Judgment, auditors consider both quantitative and qualitative factors.
The objective of this study is: 1) Identify quantitative and qualitative factors effect on auditors' materiality Judgments and its ranking 2) Determine auditors’ consensus in selecting and applying materiality guidelines in audit 3) Identify problems, restrictions and necessity of issuing materiality guidelines in Iran. In this experimental study fifteen quantitative and fifteen qualitative factors which could affect materiality Judgments, selected and examined.
The result of this study indicated that: 1) the size of Judgment  item, total assets, total revenue and its average, net profit,  equity, related items and related class in financial statement identified as significant quantitative factors in Judging materiality  level for conducting an  audit. 2) The pervasiveness of errors or misstatement to different item in financial statement, relationship of Judgment item with third parties and arm’s length transactions, unusual items, estimated items, departure from laws and regulations and audit risk of Judgment items identified as significant qualitative factors caused in adjusting materiality level. 3) Materiality guidelines based on total assets, total revenue, its average and equity (between 1 to 3 present) and net profit (above 5 percent) are agreed and applied by audit managers. Furthermore, applying net profit guideline together with average total assets and revenue guidelines will improve materiality Judgments. 4) The result indicated the necessity of issuing materiality guideline by profession. Materiality guideline could improve and consistent audit opinions in similar cases, remove problems when auditors changed, consistent the extent of audit work and eventually improve audit efficiency and effectiveness. 5) The results indicated that: a) Few auditors established materiality level in planning stage of audit b) Few auditors considered relationship between audit risk and materiality, especially in adjusting compliance and substantive tests c) In final stage of audit, the auditors do not consider the effect of likely and possible errors in combining the total effect of errors and misstatements.

An Investigation of the Audit Committee Characteristics Effects on Real Earnings Management

Volume 12, Issue 46, Summer 2015, Pages 130-154

https://doi.org/10.22054/qjma.2015.1679

Hossien Fakhari, Javad Mohammadi, Mohsen Hasannataj Kordi

Abstract The novelty and mandatory rules about establishing of the audit
committee in Iranian listed companies as one of the important part of
corporate governance are controversial subject. It has been important
especially when the real earnings management is involved. It is due to the
possibility of the detection of real earning management that is low in
comparison with accrual earning management. In companies this research
intend to investigate about audit committee characteristic and real earning
management in Iranian listed companies. So we gather data about 112 listed
companies of TSE during 1392 year and analysis them with cross-sectional
regression.
In general our findings show that there is a significant relationship
between audit committee characteristics and real earnings management. Also
our findings help to TSE policy maker for reporting and enforcement of
audit committee charter. It indicates also that there is a vital need for
applying of corporate governance rules in Iranian listed companies

Factors Affecting the Profitability of Banks

Volume 14, Issue 54, Summer 2017, Pages 119-140

https://doi.org/10.22054/qjma.2018.8272

Mohammad Reza Mehrabanpour, Mohammad Mehdi Naderi Noorain, Effat Inanlou, Elham Ashari

Abstract highlighted the role of well-functioning financial systems in investing in different sectors of the economy. The financial systems facilitate the economic growth by aggregating the limited resources for enormous investments. Considering the important role of banks in financial systems and the significant impact of the Profitability of Banks on their activities, this paper empirically analyses the factors determining the profitability of 15 banks for the period of 1384 – 1393. It should be noted that the higher levels of profitability in banks not only enables them to grant further credit, but also facilitates the investment process in risky environments. According to the literature, we divided the factors into two groups: bank specific factors and macroeconomic factors. The results of examining hypothesis using panel analyses and Eviews software and the return on equity (ROE) as the profitability measure, indicate that there is a positive relationship between the profitability factors and the asset structure, revenue diversification, economic growth and inflation. In addition, capitalization, capital structure, size, industry concentration and interest rate have a negative effect on bank profitability.

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