Empirical Studies in Financial Accounting

Abstract Earning as an important item of financial statement is considered by many researchers. Many researches in different aspect of earning show the extreme important of it. Here,  we attempt to consider  earning persistence  as a basic and effective factor in making decision and stock price so we investigate the explanatory power 's of earning (include three level of earnings:  operating  earnings, net profit and earnings forecast) in  stock price. Book value as an important factor is considered in the recent decade and some stock evaluation models use book value as a relevant factor .we also investigate the explanatory 's power of book value in stock depend on higher or lower earning persistence. Our results show, when earning persistence increase, the explanatory's power of earning in stock price increase too.  These evidences accompany our hypothesis in different level of earnings. But we could not find any evidence about contemporary role of book value and earning persistence in stock price.

Abstract Financial markets, especially capital markets are accounted as the most important instrument of equipment and financial resource allocation, but whenever wide- spread deviation and deranges occur in this market, allocation and equipment of financial resources faces serious difficulties in the country. One of the destructive and annihilating factors of capital market is forming stock bursting bubble price, therefore, considering strategic, financial and economic importance of this market, is one of the important theoretical issues in economic literature and finance management of economical and statistical simulation in recognizing and evaluating the existence of bubble price in stock exchange. Research methodology of this study is from descriptive analytical type. In  this  research  to  study  the  presence  of  bubble  price  in  Tehran  Stock Exchange,   during  the  financial  period   1991-2005,  74  active  companies which  have  been  a  member  of  Tehran  Stock  Exchange  continually  and persistently  during the above -mentioned  course were elected, and utilizing from cointegration econometric test method, the afore-said companies were tested. Results of the tests showed that with a confidence level of 95%, about 52% of the above-said companies have had stock price bubble, and in confidence level of 90% about 45% of companies have stock price bubble. With regard to the above-mentioned results, the hypothesis of existence stock price bubble in Tehran Stock Exchange during the periods 1991-2005 in the studied companies are confirmed in the expecting statistical level. Meanwhile, declining the investigation period to finance periods of 1991- 2004, quantity of stock price bubble companies have been increased in 95% and 90% confidence level. It means that in confidence level of 95%, 62% of selected companies were bubble ones, and in 90% confidence level, 52/7% of the companies have stock price bubble. Analyzing statistical tests showed that no meaningful statistical relation, between stock price bubble and size of the company has existed in 95% confidence level and, as well, statistical tests reveals that no meaningful statistical relation has existed between stock price bubble and type of industry.

Abstract In Iran, most of the time, companies prepare their financial statements merely according to the provisions of depreciation in the direct taxes act. It seems that, in some cases, these statements are not based on accounting principles. Depreciation expense is one of items which its calculations are done on rates and methods included in the direct taxes act. In this paper, the amount of go-togetherness of the depreciation provisions in the direct taxes act with the actual depreciation expense of depreciable assets was investigated. In order to test the amount of go-togetherness of depreciation provisions, five hypotheses were presented. The instrument utilized to test the hypotheses is a questionnaire. The analysis of data shows that the actual depreciation expense of depreciable assets does not have enough and necessary go-togetherness with the depreciation expense which is in line with the depreciation provisions in the direct taxes act.

Abstract Valuation theories and models have evolved over time from the very simple present value formulation to more complex relationships. But the causality between accounting numbers and the value of the firm has not been succinctly developed investors, investment advisors, and analysts continue to utilize accounting numbers as a subset of the information used in forming expectations about the probability distribution of rates of   return. Finally, to the extent that investment analysts and advisors try to beat the market, their Utilization Of information in making expectations can be colored by their personal, individualistic attributes. One of these attributes is the phenomenon of functional fixation. In psychology,   functional   fixation refers to a phenomenon   of most human behavior: "the individual attaches a meaning to a title or an object and is unable to see alternative meanings or uses. In applying this concept to accounting, they extrapolated that: "if the outputs from different accounting methods are called by the same name, such as profit, cost, etc..., people who do not understand accounting well, tent to neglect the fact that alternative methods may have been used to prepare the outputs. In such a case, a change in the accounting process clearly influences the decisions. "Functional fixation hypothesis in accounting, that is, investors have a value from securities in mind which is obtained from some certain accounting figures, such as earning per share, without paying attention to how it is calculated, or what is its information content. On the other hand, investors have functional fixation on accounting figures, not on its information content. The operational testing of the central hypothesis is achieved by testing a series of sub-hypotheses which are tailored to fit the type of data generated by the experiment. All  of  the  given  tests  pointed  up  this  matter  that, respondents  in the sample (the statistical sample was chosen from received and valid answers of 38 answer sheets) have classified the firm which has changed the method of the weighted average (its reported profit is decreased and its cash inflow is increased), much lower than its similar firm which has continued Fifo method.

Abstract The quality of accounting information (including the relevance and the reliability) has effect on capital market efficiency and optimizing decision process. The accounting and auditing education knowledge and profession usually are tried for optimizing the quality. This study examined demand of the users in security exchange market accountants (registered in Tehran Security Exchange Market); (2) Internal auditors (in accepted corporations); (3) Investment Technicians; (4) Accounting students (Ph.D. & MA) in examined group and (5) Accounting students (Ph.D. & MA) in control group. Conclusion: The result shows that all of examined groups confirm that: 1)      Internal control Reporting is useful for all users of financial information; 2)      The report enhances quality of the information; 3)      The report should be mandated for accepted corporation in TEHRAN Security Exchange Market; 4)      The report is required to auditing by independent auditor.