Document Type : Research Paper

Authors

1 PhD student accounting, Shahrood Branch, Islamic Azad University, Shahrood, Iran

2 Associate Professor, Department of Accounting, Shahrood Branch, Islamic Azad University, Shahrood, Iran

3 Department of Management, Allameh Tabatabai University

Abstract

Efficient market hypothesis predicts that capital markets are beset with cer-tain biases which result from wrong estimation, and negatively influence shareholders’ expectations for higher returns, which in turn affects invest-ment efficiency, financial constraints and corporate performance efficacy in competitive markets, and eventually mitigates firm value. The present study aims Financial reporting language Bad on Aggressive Financial Reporting Investor protection over the period 2013-2017. Earnings forecast error and CEOs’ overconfidence biases serve as the measure of CEO’s perceptual biases, the model developed by Biddle et al (2009) is employed to proxy for investment efficiency, and KZ model is also adopted to calculate financing constraints. The results reveal that both earnings forecast error and overconfidence biases negatively affect investment efficiency, while they positively influence cor-porate financing constraints. These results indicate that CEO’s perceptual biases creates a constraint on financing, and, on the other hand, reduces the efficiency of corporate investments. Under these conditions, the trust and confidence of investors and shareholders in relation to the company will be reduced, and the company will face negative features like the risk of a financial crisis.

Keywords

ابراهیمی، کاظم.، بهرامی‌نسب، علی.، باغیان، جواد. (۱۳۹۶). تأثیر کیفیت حسابرسی و رعایت حقوق سهامداران بر احتمال گزارشگری متقلبانه، دانش حسابرسی، ۱۷(۶۹): ۱۲۵-۱۴۹.
احمدی، سعیدعلی.، سروش یار، افسانه. (۱۳۹۵). ارزیابی نقش رویکردهای تدوین استانداردهای حسابداری و تخصص کاری حسابرس بر گزارشگری مالی متهورانه، فصلنامه حسابداری مالی، ۸(۳۰): ۱۴۳-۱۶۱.
پورسید، سیدبهزاد.، حسینی، سیدمحمدرضا.، سهرابی، لیلا. (۱۳۹۵). راهکارهای بهبود نظام حاکمیت شرکتی ایران، با تأکید بر شاخص حمایت از سهامداران خرد بانک جهانی، فصلنامه پژوهشنامه بازرگانی، ۸۱(۴): ۵۷-۹۵.
پورکریم، محمد.، جبارزاده کنگرلویی، سعید.، بحری‌ثالث، جمال.، قلاوندی، حسن. (1397). تأثیر مدیریت سود بر لحن گزارشگری مالی در نظام حسابداری ایران، پژوهش‌های حسابداری مالی، ۱۰(۳): ۲۱-۴۴. doi: 10.22108/far.2018.112473.1300
جلیلی، صابر.، معصوم پور، یلدا. (۱۳۹۷). اثر حقوق سهامداران و مالکیت درونی بر مدیریت سود، تححقیقات حسابداری و حسابرسی، ۳۷(۱): ۱۶۳-۱۸۰.
حسینی، سیدعلی.، شفیع‌زاده، بهاره. (1398). تبیین مدلی برای حمایت از حقوق سرمایه‌گذاران با تأکید بر سازه‎های حسابداری، بررسی‏‌های حسابداری و حسابرسی، 26(2): 193-216.
رضازاده، جواد.، بکشلو، عاطفه. (۱۳۹۳). گزارشگری مالی متهورانه و آگاهی بخشی قیمت سهام، پژوهش‌های کاربردی در گزارشگری مالی، ۳(۵): ۷-۲۲.
زیوری‌کامران، محمدجعفر.، فخاری، حسین. (1398). تبیین الگوی حسابرسی داخلی اثربخش از منظر ذینفعان، مطالعات تجربی حسابداری مالی، 16(64): 81-111.
شفیع‌زاده، بهاره.، حسینی، سیدعلی.، رحمانی، علی.، سلطانی، محمد. (1397). نقش گزارشگری مالی، شفافیت و راهبری شرکتی در حمایت از حقوق سرمایه گذاران، فصلنامه بورس اوراق بهادار، 11(42): 74-95.
صمدی، علی حسین.، مهرپور، فریبا. (۱۳۹۲). بررسی تأثیر حفاظت از حقوق مالکیت بر سرمایه‌گذاری خصوصی در ایران، فصلنامه مطالعات اقتصادیِ کاربردی ایران، سال دوم، ۷(۳): ۸۷-۱۱۰.
میرعلی، مهدیه.، غلامی مقدم، فایزه.، حصارزاده، رضا. (1397). بررسی رابطه لحن گزارشگری مالی با عملکرد آتی شرکت و بازده بازار، دانش حسابداری مالی، 5(3): 81-98. doi: 10.30479/jfak.2018.1513
هدایتی‌پور، مرضیه.، نصیرزاده، فرزانه. (1397). بررسی رابطۀ بین مدل‌های کیفیت گزارشگری مالی، زمانبندی تعهدات، کارایی و عدم کارایی سرمایه‌گذاری، مطالعات تجربی حسابداری مالی، 15(58): 79-105
Abd-Elsalam, O. (1999), “The Introduction and application of international accounting standards to accounting disclosure regulations of a capital market in a developing country: the case of Egypt. PhD Thesis, Heriot-Watt University, Edinburgh
Ajina, A., Laouiti, M., Msolli, B. (2016). Guiding through the fog: Does annual report readability reveal earnings management? Research in International Business and Finance, 38, 509-516.
Altaf, N., Ahamad Shah, F. (2018). Ownership concentration and firm performance in Indian firms: does investor protection quality matter? Journal of Indian Business Research, 10(1): 33-52.
Aly, D., El-Halaby, Sh., Hussainey, Kh. (2018). Tone disclosure and financial performance: evidence from Egypt", Accounting Research Journal, 31(1): 63-74, https:// doi.org/10.1108/ARJ-09-2016-0123
Bowen, R. M., Davis, A. K., & Matsumoto, D. A. (2005). Emphasis on pro forma versus GAAP earnings in quarterly press releases:
Breguer, W., Muller, T., Rosenbach, D., Saizmann, A. (2018). Corporate Social Responsibility, Investor Protection, and Cost of Equity: A Cross-Country Comparison, Journal of Banking & Finance, 96(10): 34-55
Cho, C., Roberts, R. and Patten, M. (2010). The language of US corporate environmental disclosure”, Accounting, Organizations and Society, 35(4): 431-443
Clarke, G. (1997), “Messages from CEOs: a content analysis approach”, Corporate Communication: An International Journal, 2(1): 9-31.
Clatworthy, M. and Jones, M. (2006). “Differential patterns of textual characteristics and company performance in the chairman’s statement”, Accounting, Auditing & Accountability Journal, 19(4): 493-511.
Clatworthy, M. and Jones, M.J. (2003). “Financial reporting of good news and bad news: evidence from accounting narratives”, Accounting and Business Research, 33(3): 171-185.
Davis, A. and I. Tama-Sweet (2012). Managers' Use of Language across Alternative Disclosure Outlets: Earnings Press Releases versus MD&A. Contemporary Accounting Research, Vol. 29, No. 3, Pp. 804-837
Davis, A., Piger, J., & Sedor, L. (2012). Beyond the Numbers: Measuring the Information Content of Earnings Press Release Language. Contemporary Accounting Research, 29(3): 845-868
Determinants, SEC intervention, and market reactions. Accounting Review, 80(4): 1011–1038
Haidar, J, I. (2009). Investor protections and economic growth, Economics Letters, 103(1): 1-4
Hart, R. P. (2000). DICTION 5.0: The text analysis program. Thousand Oaks: Sage-Scolari.
Hasan, M. M. (2017). Managerial ability, annual report readability and disclosure tone (April 23, 2017). Available at SSRN: https://ssrn.com/abstract=2957135.
Heltzer, W., Mindak, M, P., Shelton, S, W. (2012). The relation between aggressive financial reporting and aggressive tax reporting: Evidence from ex-Arthur Andersen clients, Research in Accounting Regulation, 24(2): 96-104
Hong, H. Stein, J. C. (2003). Differences of Opinion, Short-sales Constraints, and Market Crashes, The Review of Financial and Studies, 16(2), PP. 487-525.
Hooghiemstra, R. (2000). Corporate communication and impression management—new perspectives why companies engage in corporate social reporting. Journal of Business Ethics, 27(2): 55–68.
Iatridis, G. E. (2016). Financial Reporting Language in Financial Statements: Does Pessimism Restrict the Potential for Managerial Opportunism?. International Review of Financial Analysis. Vol. 45, issue C, Pp 1-17.
Iatridis, G. E. (2016). Financial reporting language in financial statements: Does pessimism restrict the potential for managerial opportunism?. International Review of Financial Analysis, 45: 1-17.
Ismail, K. and Chandler, R. (2005), “Disclosure in the quarterly reports of Malaysian companies”, Financial Reporting, Regulation and Governance, 4(1): 1-26.
Jin, L., & Myers, S. C. (2006). R2 around the world: new theory and new tests. Journal of Financial Economics 79(2):PP. 257–292.
Jones, J. (1991). "Earning Management During Import Relief Investigations", Journal of Accounting Research, Vol. 193, PP. 210-212
Kothari, S. P., Leone, A., Wasley, C. (2005). Performance Matched Discretionary Accrual Measures", Journal of Accounting and Economics, 39(1): 163-197
Lamberton, B., Mihalek, P. H., & Smith, C. S. (2005). The tone at the top and ethical conduct connection. Strategic Finance, 86: 36–39.
Lo, K., Ramos, F., Rogo, R. (2017). Earnings management and annual report readability. Journal of Accounting and Economics, 63(1), 1-25.
Loughran, T., & Mcdonald, B. (2011a). When is a liability not a liability? Textual analysis, dictionaries, and 10-Ks. Journal of Finance, 66: 35–65.
Merkl-Davies, D., & Brennan, N. (2007). Discretionary disclosure strategies in corporate narratives: Incremental information or impression management? Journal of Accounting Literature, 26: 116–196.
Nelson, M, W. (2003). Behavioral Evidence on the Effects of Principles and Rules-Based Standards”, Accounting Horizons, 17(1): 91-104.
Oyeler, P., Laswad, F. and Fisher, R. (2003). Determinants of internet financial reporting by New Zealand companies, Journal of International Management and Accounting, 14(1): 26-63.
Patelli, L., & Pedrini, M. (2013). Is the optimism in CEO’s letters to shareholders sincere? Impression management versus communicative action during the economic crisis. Journal of Business Ethics. doi:10.1007/s10551-013-1855-3.
Patelli, L., Pedeini, M. (2015). Is Tone at the Top Associated with Financial Reporting Aggressiveness?, Journal of Business Ethices, 126(1): 3-19.
Riley, T. J., Semin, G.R. & Yen, A. C. (2014). Patterns of Language Use in Accounting Narratives and Their Impact on Investment Related Judgments and Decisions. Behavioral Research in Accounting. 67(1): 59-84
Schlenker, B. R. (1980). Impression management: The self-concept, social identity, and interpersonal relations. Monterey/California: Brooks/Cole.
Singhvi, S. and Desai, H. (1971). An empirical analysis of the quality of corporate financial disclosure, Accounting Review, 46(1): 129-138
Tetlock, P. C., Saar-Tsechansky, M. & Macskassy, S. (2008). More than words: Quantifying language to measure firms’ fundamentals. Journal of Finance. 63(3):1437-1467.
Veronica, S., Alexeis, G, P., Valentina, C., Elisa, G. (2019). Do stakeholder capabilities promote sustainable business innovation in small and medium-sized enterprises? Evidence from Italy, Journal of Business Research, https://doi.org/10.1016/j.jbusres.2019.06.025
Watts, R. L. (2003) b, Conservatism in accounting, Part I, explanations and implications. Accounting Horizons 17(3): 207-221.
World Bank (2014); Protecting Minority Investors
Yuthas, K., Rogers, R., & Dillard, J. F. (2002). Communicative action and corporate annual reports. Journal of Business Ethics, 41: 141–157.