Financial Accounting
Abas Aflatooni; Mohamad Khatiri
Abstract
Recent research has increasingly focused on earnings management through the classification shifting of income statement items. However, domestic studies have only minimally addressed this topic. While international research has extensively examined the impact of the COVID-19 pandemic on earnings management, ...
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Recent research has increasingly focused on earnings management through the classification shifting of income statement items. However, domestic studies have only minimally addressed this topic. While international research has extensively examined the impact of the COVID-19 pandemic on earnings management, there is a notable lack of empirical evidence concerning Iranian firms. This study investigates the presence of earnings management through classification shifting in Iranian firms, comparing the phenomenon during the COVID-19 outbreak with other periods. The analysis utilizes data from 137 firms listed on the Tehran Stock Exchange, covering 2012 to 2023, resulting in 1,644 observations. The models are estimated using the generalized least squares (GLS) approach, controlling for year and industry effects. The findings confirm the existence of earnings management through classification shifting among Iranian firms. Moreover, the results indicate that this practice intensified during the COVID-19 pandemic compared to other years. Robustness tests, which employed different time frames for the pandemic and decile-ranked values for research variables, corroborate the study's main findings.
Leila Farvizi; Sakineh Sojoodi; Hossein Asgharpour; Jafar Haghighat
Abstract
Previous research have been conducted to establish connections between systematic risk and various accounting and financial variables of companies. Many empirical investigations have employed the classical regression method, which is not without its limitations, notably the need to focus on a limited ...
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Previous research have been conducted to establish connections between systematic risk and various accounting and financial variables of companies. Many empirical investigations have employed the classical regression method, which is not without its limitations, notably the need to focus on a limited number of variables in order to maintain an acceptable level of regression degrees of freedom. In order to address this limitation, the present study employs the Bayesian model averaging method. By analyzing data from 55 companies listed on the Tehran Stock Exchange between 2010 and 2023, this study examines the impact of 58 different financial and accounting variables on the systematic risk of these companies, ultimately identifying the key determinants of systematic risk. The estimation results reveal that, among the investigated variables, five variables exert the greatest influence on systematic risk, with company size ranking first. The average coefficient for this variable is positive. Following closely are asset turnover and operational efficiency, which hold the second and third positions, respectively. The average operating efficiency ratio displays a negative coefficient, while the average asset turnover ratio exhibits a positive coefficient. The fourth determinant is the ratio of long-term debt to equity, which has a positive coefficient. Finally, the fifth explanatory variable is the ratio of the company's market value to the book value of its total assets, exerting a negative effect on systematic risk.
Financial Accounting
Sarah Mohsin; Narges Hamidian; seyed abbas hashemi
Abstract
Stock price crash risk, defined as an adverse event, is a pervasive phenomenon at the market level. This implies that the decline in stock prices is not limited to a specific stock but extends across the entire market. Stock price crashes result in significant losses for shareholders and investors, as ...
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Stock price crash risk, defined as an adverse event, is a pervasive phenomenon at the market level. This implies that the decline in stock prices is not limited to a specific stock but extends across the entire market. Stock price crashes result in significant losses for shareholders and investors, as well as a decline in the overall capital market. Hence, understanding the factors influencing this phenomenon is of critical importance. The present study aims to investigate the impact of industry operating cash flow volatility on future stock price crash risk, considering the roles of economic policy uncertainty and conditional conservatism in companies listed on the Tehran Stock Exchange. A sample of 136 companies was selected using a screening method over the period from 2012 to 2022.To analyze the data and test the hypotheses, regression analysis and panel data techniques were employed. The findings indicate that industry operating cash flow volatility has a positive and significant effect on future stock price crash risk. Furthermore, economic policy uncertainty amplifies the positive effect of industry operating cash flow volatility on stock price crash risk. Conversely, conditional conservatism in accounting mitigates the positive relationship between operating cash flow volatility and future stock price crash risk.
Financial Accounting
Shadi Hasanzadeh; Khadijeh Eslami; Mana Farahi
Abstract
Today, knowledge, innovation, and technology play a crucial role in economic growth and development. Among the key factors influencing innovation, the security of intellectual property rights stands out as both essential and challenging. This study examines the impact of intellectual property protection ...
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Today, knowledge, innovation, and technology play a crucial role in economic growth and development. Among the key factors influencing innovation, the security of intellectual property rights stands out as both essential and challenging. This study examines the impact of intellectual property protection on innovation, considering the mediating roles of research and development (R&D) expenditures and financial constraints. The analysis covers 119 companies listed on the Tehran Stock Exchange from 2018 to 2022, using a correlation-analytical approach. The results of hypothesis testing, based on a regression model, indicate that intellectual property protection fosters innovation within companies. Additionally, R&D expenditures and financial constraints act as mediating factors in this relationship. The findings suggest that strengthening intellectual property protection shields innovators from imitation and theft, encouraging companies to invest more in innovation. By securing exclusive rights, firms can achieve higher profitability and returns on investment. Furthermore, confirming the mediating effects of R&D expenditures and financial constraints highlights that increased intellectual property protection generates positive feedback for investors, thereby reducing financial constraints. This, in turn, allows for greater budget allocation to innovation. These insights can assist policymakers, standard setters, and legislators in refining national strategies by deepening their understanding of the benefits and challenges associated with intellectual property protection. By implementing targeted incentive policies, they can encourage capital market participants to drive innovation and enhance corporate innovation activities.
Financial Accounting
Reza Malek; Hossien fakhari
Abstract
Abstract The great impact of politics on the capital market has caused a large share of accounting and financial research to be linked with political issues. For this reason, the current research tries to investigate the effect of the presidential election on the earnings mmanagement by considering the ...
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Abstract The great impact of politics on the capital market has caused a large share of accounting and financial research to be linked with political issues. For this reason, the current research tries to investigate the effect of the presidential election on the earnings mmanagement by considering the moderating role of ownership structure due to its importance. For this purpose, the data related to 122 companies listed in the Tehran Stock Exchange was gathered by systematic elimination method during 2005-2022 and analyzed by multivariate regression method. The findings have shown that the presidential election has a negative and significant effect on the accrual and real earnings managment. Also, by separating the industries based on "political" characteristics, it was shown that in the years of presidential elections, political industries manage Earnings through accrual Earnings management and non-political industries through real Earnings management. Also, the findings have shown that the ownership structure (the amount of ownership of institutional stockholers) does not have a moderating role in the effect of the presidential election on the management of accrual and real Earnings. These findings show that in companies during the presidential election, due to the increased sensitivity and supervision of various social and political institutions, the "political costs" on the performance of managers increases, and this increase leads to a decrease in Earnings management (accrual and real).
stock exchange
hasan farajzadeh; Aَfsane Dehghan Dehnavi
Abstract
This study investigates the spillover effect of disclosures timing of financial statement among peer firms, considering the deadlines as stipulated by the Executive Regulations on Information Disclosure for registered firms under the Securities and Exchange Organization. Findings based on the data of ...
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This study investigates the spillover effect of disclosures timing of financial statement among peer firms, considering the deadlines as stipulated by the Executive Regulations on Information Disclosure for registered firms under the Securities and Exchange Organization. Findings based on the data of 242 firms listed in Tehran Stock Exchange during the years 1390 to 1401, indicate the peer effects in disclosure timing of pre-audited interim and annual financial statements, in results of peers competition in attract market attention and spillover effects due to mimic disclosure timing. In contrast, we can’t observe the spillover effects in disclosure timing of audited financial statement. Furthermore, the results provide insights into market attention competition among peer firms in release of semi-annual audited financial statements for clients audited by non-private audit firms (the Audit Organization and Mofid Rahbar Institute). This finding suggests a potential value-added role of non-private audit firms in enhancing the credibility of interim audited financial statements. The presence of a spillover effect in unaudited financial statement disclosures, contrasted with its absence in audited disclosures, may be attributed to the higher costs associated with accelerating the release of audited financial statements and the strategic timing of unaudited disclosures to achieve the desired market response. Overall, the findings highlight the influence of peer firms on corporate disclosure timing and underscore the role of imitation in shaping these decisions.
Financial Accounting
Hayder Hussein Nassr; Hamzeh Didar; Gholamreza Mansourfar
Abstract
Several theoretical frameworks explain how financial reporting quality influences corporate social responsibility (CSR) activities. Legitimacy theory suggests that companies with agency problems may disclose CSR information to rebuild trust. Signaling theory argues that high-quality financial reporting ...
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Several theoretical frameworks explain how financial reporting quality influences corporate social responsibility (CSR) activities. Legitimacy theory suggests that companies with agency problems may disclose CSR information to rebuild trust. Signaling theory argues that high-quality financial reporting uses CSR to signal transparency and financial health. Stakeholder theory emphasizes that high-quality financial reporting motivates companies to consider stakeholder interests. Agency theory suggests that low-quality reporting may lead companies to use CSR to hide weaknesses. Lys et al. (2015) propose three hypotheses: 1) the charity hypothesis (CSR for societal benefit), 2) the investment hypothesis (CSR to improve performance), and 3) the signaling hypothesis (CSR driven by future prospects or opportunism). This study aims to examine the impact of financial reporting quality on these hypotheses.Research hypotheses1. CSR activities do not have an impact on the company's financial performance.2. Financial reporting quality positively impacts CSR activities motivated by investment purposes.3. Financial reporting quality has a significant impact on CSR activities driven by signaling motives.2. Literature ReviewFinancial reporting quality can create different incentives for companies to engage in corporate social responsibility (CSR) activities, with varying motivations depending on the level of reporting quality. According to Lys et al. (2015), these motivations can be categorized into three hypotheses: charity, investment, and signaling.Charity Hypothesis: High-quality financial reporting can lead to CSR activities driven by genuine philanthropic motivations, whereas companies with low-quality reporting might use CSR as a tool to mask managerial or informational weaknesses. The charitable motivation is typically seen as non-strategic in companies with high-quality reporting, but in companies with lower-quality reporting, CSR might be a means to manipulate stakeholders' perceptions without true commitment to society.Investment Hypothesis: In this hypothesis, CSR activities are seen as an investment aimed at improving financial performance. Companies with high-quality financial reporting view CSR as a strategy to enhance performance, believing it will reduce capital costs, improve reputation, and strengthen relationships with stakeholders.Signaling Hypothesis: CSR activities are used as signals to the market and stakeholders. Companies with high-quality financial reporting use CSR to send positive signals regarding their commitment to social and environmental causes, while companies with poor reporting may use CSR as a misleading signal to compensate for poor financial transparency.3. MethodologyThis applied, retrospective study focuses on analyzing relationships between various variables using past data. It is descriptive-correlational in nature. A library research method was used for developing the theoretical framework and reviewing the literature. Primary data was collected from sources such as the Rahavard Novin software database, financial statements, company notes, and board of directors' reports. The research population includes companies listed on the Tehran Stock Exchange, with data collected from 2014 to 2023. Based on specific criteria, 101 companies were selected for hypothesis testing during this period.4. Results and DiscussionThe results of the first hypothesis showed that CSR positively impacts company performance, indicating that motivations beyond charity should be explored in Iranian companies. Financial reporting quality was found to drive CSR activities, supporting the second and third hypotheses related to investment and signaling motives.The second hypothesis confirmed that financial reporting quality positively impacts optimal CSR, with companies using CSR to increase value and profit. This is consistent with signaling and stakeholder theories, as companies with high-quality reporting are more motivated to engage in CSR for investment purposes.The third hypothesis showed that financial reporting quality negatively impacts deviations from optimal CSR, suggesting that high-quality reporting reduces opportunistic motives and leads to more genuine CSR efforts. This confirms that financial reporting quality promotes investment motivations and reduces opportunistic behavior.5. ConclusionBased on the results of this study, it can be concluded that companies can improve their performance by engaging in corporate social responsibility (CSR) activities, and these activities are driven by motivations beyond philanthropic goals. In this context, financial reporting quality has a positive and significant impact on optimal CSR. This indicates that companies with higher financial reporting quality engage in CSR activities with investment and profit-seeking objectives. Additionally, financial reporting quality has a negative and significant impact on deviations from optimal CSR. This result suggests that companies with higher financial reporting quality are less likely to send opportunistic signals through CSR, and as a result, CSR in these companies is more optimal, or in other words, is conducted for investment purposes, profit generation, and enhancing company value.
