Empirical Studies in Financial Accounting

Abstract In time past many ratios such as current  ratio  and  quick  ratio  had  bee11 used  for evaluations of corporation  liquidity and  ability in debt  repayment. But in recent years because of some deficiency and defection of  these two ratios some other ratios such as liquidity index, cash comprehensive liquidity index, net liquidity index, cash conversion cycle, lambda and etc have been presented . In this essay in addition to presentation of these modem ratios via calculation of modem ratio correlation with traditional ratios, we will discuss to some extent the in formational identify of them. For this reason all active corporation i n cement industry from Tehran exchange have been chosen and ratios for a period of 5 year (1379-1383) have been calculated and  the correlation  of  them  have been  calculated  by  SPSS (a software). The results of  this research  show  that  although  the modem  ratios have a near  relationship  with  traditional  ratios but  they  are  some  differences  that can  play  an  important  role on  decision  and   they contain  various  and  more information  than  traditional  ratios and can  help users to make their decision better than before.

Abstract The duty of an accountant is more than measurement, classification and simple summarizing of data of financial reports which is used by others and the main purpose of accounting reports is to force an effect on behaviors in term of useful applications. Subjects such as improvement in relationships increase the human body's accuracy in judgments and information processing. Simplification of financial decision making is considered by lots of accountant investigators. This made some studies for modification of information from financial   data. The current research was done considering the fact that "Use of graphical color symbols as a tool for data show, is very effective and familiar" and tested the effects of valuable color charts. Studies showed that all of factors of sexuality, individual characteristics and their psychology, difficulty and kind of decision making are entered in effectiveness of colors. So the current research is pay attention to the effects of uses of color" charts to show the data and accounting information in conditions of difficult problems against simple ones and also tries the carefulness of decisions for ladies against gentlemen. This tends to reach to the main target which is preparation of the information with higher degrees of quality in term of subject, decision environment and decision makers' characteristics. Decision making in current  research  was  in  type  of  prediction  of continuity in the works of companies using test samples  of  gathered information  and  financial  ratios  i n  t he shape of column charts. Results of this research showed that the decision faults is reduced when color charts of financial information of the companies is used for difficult information processing and also made a better accuracy in predictions. Meanwhile, in comparison of the gentlemen, ladies did their judgments better with lower faults when color charts were used.

Abstract In this research the investigator tries to predict the companies’ EPS by comparing the most famous forecast with management foresees companies’ budget. For this goal, among different types of forecasting methods, the most famous of them (Box-Jenkins method) is chosen and based on economic evaluation methods, appropriate model will be suited. It is clear that as per correctness test methods and evaluation tests the above mentioned model should be confirmed. In this manner a suitable forecasting model shall be obtained. Then, by Wilkinson rank sum test, the suited forecast model with management forecast will be situated along each other and by calculating their deviation from real EPS from the point of closing to the reality will be judged. The result of this research shows that the EPS mentioned by management in the companies’ budget is closer to reality than the EPS foresee by Box­ Jenkins time series model. In more clear word, the declared EPS by manager is more real compare to the best time series forecast models.

Abstract In view of the expanding capital market, it is of great significance to recognize the variables affecting stock return and its price. There exist different methods for the prediction of stock return such as the Capital Assets Pricing Model, the so-called CAPM, Market Model, Arbitrage Pricing Theory and Factorial Model. According to CAPM, β (Beta) is the only variable capable of predicting the return. The studies and researches carried out with respect to predictability potential of CAPM model and application of other variables; demonstrate that there exist other variables which   outperform   stock   return   predictability potential of the β (Beta). Included among such variables are the size, debt to equity, Book to Market, earnings to price and sale to price ratios. The present research was aimed at testing the above-mentioned variables and the β (Beta) for the prediction of stock  return  in order to  recognize  the  variables  which  are better  capable  of predicting the stock return in Tehran Stock Exchange (TSE). Independent variable were tested against the dependent variable (return) on an annual basis for the years 1 376- 1382 (1997- 2003). Further, multi­variable models were tested, both annually and pooled cross-sectionally. The pooled cross-sectional test results demonstrated that the model was statistically significant. However when the model was compared with single variable models, the increase in pred1ctabiltty potential was accepted. In single variable tests, no significant relationship was observed between debt to equity ratio and the stock return. Furthermore, no significant relation was observed between Beta and the Stock return, as predicted  in CA PM  model , and  the  results  were  dispersed  and  scattered. No significant relation  was observed  between magnitude of the total assets (logarithm)  as size variable and  the  stock return in 4  consecutive years;  however,  when  the  size  was defined  in  terms of  stock  market value, a significant  relation  was  observed between  the  size  so  defined  and  the  stock  return  in  4  consecutive  years. There existed   a  significant   rela1ion   between   the  sale  to  price   and  the earnings   to  price  ratios   with   the  stock   return   in  4  consecutive  years. However the Book to Markel ratio demonstrated great dispersion in results, indicating that there was no significant and stable relation.  Considering the potential effect of the   statistical models on the research findings, complementary tests were carried out on the basis of formation of portfolio based on Beta (β) and Book to Market ratio variables. Three portfolios were formed, taking into consideration the magnitude of each and every variable. The findings of such test substantiated that, during the years 1379-1380, portfolios with high beta (β) proved to have higher return compared to the ones with low Beta (β). With respect to the portfolios formed on the basis of Book to Market ratio, the findings proved compatible with the regression models.