Accounting report
ehsan mohebi; jafar babajani; Mohammad Javad Salimi; mohammad taghi taghavi fard
Abstract
Regional Electric companies are organizations that pursue both social and financial goals in order to fulfill the assigned missions, so fulfilling the accountability due to their dual goals is of fundamental importance. In this research, by examining the information needs of the users of the financial ...
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Regional Electric companies are organizations that pursue both social and financial goals in order to fulfill the assigned missions, so fulfilling the accountability due to their dual goals is of fundamental importance. In this research, by examining the information needs of the users of the financial reports, the effective factors in the financial reporting of the sector have been studied. The aim of this research is to present a model for the environmental conditions and characteristics of regional electric companies in Iran. For this purpose, the required data after library study and exploratory search in the theoretical foundations and financial and accounting rules and regulations governing the relations of these persons and using a questionnaire, collected and analyzed using the fuzzy Delphi research method and appropriate statistical tests. The evidence from the analysis of the views of the respondents shows that the influencing factors are in four dimensions, including the compatibility of the model in providing the achievement of the organization's goals, the needs of information users, compatibility with financial and accounting laws and regulations, and finally, budget control and credit status reporting. Experts also agree on the factors proposed by this research to design and explain the financial reporting model of regional power companies in Iran
Accounting report
Fatemeh Asnad; Hossein Fakhari
Abstract
Nowadays, the importance of water and the management of its resources are among the most controversial issues at the global level due to climate change. This issue is especially important in Iran, which suffers from continuous drought. Therefore, the aim of the current research is to explain the determinants ...
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Nowadays, the importance of water and the management of its resources are among the most controversial issues at the global level due to climate change. This issue is especially important in Iran, which suffers from continuous drought. Therefore, the aim of the current research is to explain the determinants affecting water reporting in the listed companies at the Tehran Stock Exchange. For this purpose, by using the data of 102 companies during the years 2012 to 2021 which were selected by elimination method, the determinants affecting the disclosure of water reporting were determined and analyzed by stepwise regression and multiple regression method. The results of this research showed that the highest amount of disclosure related to water belonged to chemical and oil industry companies, also in the investigation of the determinants affecting water reporting, it was found that the determinants of firm age, board size, financial expertise of the audit committee, concentration of ownership, institutional ownership, return on assets, average annual rainfall, reputation, regulation and sensitivity of the industry to water had an impact on corporate water reporting. These findings can be useful for planning and controlling water management, as well as for investors to know the drivers of corporate disclosure in forming their optimal portfolio.
Accounting report
Mahdi Saghafi; Azam Pouryousof; Ali Shirzadi
Abstract
In this research, the relationship between the discovery of audit distortions and the readability of financial reports has been investigated, as well as the moderating effect of management ability on this relationship. This research is practical in terms of its purpose, and the correlation method is ...
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In this research, the relationship between the discovery of audit distortions and the readability of financial reports has been investigated, as well as the moderating effect of management ability on this relationship. This research is practical in terms of its purpose, and the correlation method is causal (post-event). In this research, the data of 129 companies listed on the Iran Stock Exchange during a seven-year period (from 2015 to 2021) were gathered to test the hypotheses using panel data. The collection of information in this study was done using library methods. Related data to measure the variables were collected from the Codal website and financial statements of the companies. Basic calculations were done in Excel. Then, Stata software was used to test the research hypotheses. The results of the research show that the discovery of audit distortions has a direct and significant effect on the readability of financial reports. Additionally, the results indicate that the ability of managers can not only moderate the positive relationship between the discovery of audit distortions and the readability of financial reports, but also increase the intensity of this relationship.IntroductionA significant part of the companies' information is presented through the annual reports. A clear presentation of this amount of information is important for the clear understanding and interpretation of the information in the financial statements. There is a possibility that company managers change the readability of financial reports in order to attract the attention of investors, and control the perceptions of information users. The possibility of managers exploiting loopholes in accepted accounting principles and standards for personal gain necessitates a thorough evaluation and review by auditors. This evaluation aims to identify potential opportunities for fraud and weaknesses in these principles and standards for rectification. In this way, auditors can play an important role in making financial reports more readable through the quality of the audit. At the same time, the motivation and ability of managers to apply personal interests can also be an obstacle to high-quality auditing. Therefore, the purpose of this research is to examine the effect of audit quality on the readability of financial reports and to investigate how managers' ability can influence this relationship.Research Question(s):Does audit quality have a significant effect on the readability of financial reports?Can managers' ability moderate the relationship between audit quality and readability of financial reports?Literature ReviewBlanco et al. (2021) stated in their research that when annual reports are less readable, auditors spend more effort on auditing financial statements. Furthermore, Hassan (2017) indicated that companies with capable managers publish more readable financial reports. Ghanizadeh et al. (2021) also concluded that financial knowledge and ability of managers have a positive and significant effect on audit quality.MethodologyThe data needed for the research were collected through Rahvard Navin software and Codal website, as well as from the audited financial statements of the companies and their audit reports. The statistical population of the research consists of the companies listed on the Iran Stock Exchange. Thus, 129 companies were selected from the statistical population over seven years (903 observations) from those active between 2015 and 2021, after applying restrictions.ResultsThe findings of the research show that the increase in sensitivity of the auditors in their proceedings, which has led to the discovery of more and more accounting distortions and finally the improvement of audit quality, has led to effective communication with managers in choosing simple words and phrases. This results in an increase in the use of simple language and a reduction in the complexity of financial report content, thereby enhancing the readability of financial reports. Additionally, the ability of managers can not only moderate the positive relationship between audit quality and the readability of financial reports, but also increase the intensity of this relationship.DiscussionThe readability of managers' explanatory reports is crucial for influencing information users. However, the absence of a universal standard for reading such reports presents management with numerous choices regarding content and even formatting. It is possible for managers to mislead the users of information when choosing the right decision by manipulating the readability of financial reports. This issue underscores the essential role of auditors, given its financial consequences and the potential for economic crises. Auditors play a crucial role in enhancing the quality of financial reports and mitigating opportunistic motives of managers. As the CEO is a key figure in the company's economy with significant influence, they can impact the company's value and profitability through their presentation of news and reports. Therefore, audit quality as one of the most important factors in the implementation of audit operations in audit institutions should be considered, so that the mission of auditing, which is ensuring financial statements, is carried out at the highest level of confidence. However, in situations where managers possess high abilities, there is a possibility of adjusting and being affected by this relationship. In this situation, there is a contradiction regarding the managers' ability to provide clear or complex reports and the quality of the audit. This issue originated from theories such as representation and stakeholders. Therefore, the moderating effect of managers' ability on the relationship between audit quality and readability of financial reports is important. In other words, capable managers in different situations send a positive sign of the company's status to the market by providing clear information and thus reduce agency costs. Thus, these managers have a greater ability to clearly express information to the market, which helps create a competitive advantage, maintain reputation, and foster self-motivation.ConclusionIn general, the results of this research indicate that the quality of auditing has improved, and the ability of managers plays a crucial role in enhancing the quality and transparency of financial reports. Therefore, it can be said that audit quality is an important and influential variable in ensuring financial statements and gaining the trust of information users. Additionally, capable managers demonstrate a greater inclination towards information transparency due to their superior performance.
Accounting report
Mohammad Soleymani; Mohammad Arabmazar Yazdi; MohammadHosien SafarZade; Javad Shekarkhah
Abstract
This study aims to investigate how a change in the accounting method of calculating bank loan loss provisions affects financial reporting quality of banks. In doing so, the current theoretical literature on the topic of the research has been described and the conflicting arguments in the previous research ...
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This study aims to investigate how a change in the accounting method of calculating bank loan loss provisions affects financial reporting quality of banks. In doing so, the current theoretical literature on the topic of the research has been described and the conflicting arguments in the previous research have been expressed. Subsequently, using the transfer matrix method, loan loss reserves have been calculated for a sample of 17 banks, assuming that the method approved by international accounting standards (expected credit loss model) has been applied. Then, the research variables’ data, spanning from 2017 to 2021, was collected and analyzed under two assumptions: employing the current method and using the expected credit loss model. Then, the research hypothesis was tested using the least squares method. The results of the research show that the relationship between the change in the reporting system and discretionary accruals as an indicator of the financial reporting quality is negative and significant. Therefore, a change in the current accounting methods used for the calculation of loan loss reserves causes reduction in discretionary accruals and improvement of financial reporting quality. On the other hand, the results of this research show that large banks are more interested in using discretionary accruals and applying profit management than small banks, which can be caused by the "political costs theory". IntroductionThe quality of financial reports remains an important issue, garnering serious attention from regulators, professional accountants and other users of financial information. This is due to the irreplaceable role of financial reporting quality in reducing agency problems and information asymmetry (Anto & Yusran, 2023). In the banking system, the method used for calculating loan loss reserves is one of the most important factors affecting the quality of financial reporting. This is because the loan loss provision, typically the largest bank accrual, is highly correlated with banks' net income and represents the most prevalent accrual. Loan loss provisions are accruals of fundamental importance to bank performance, and they also reflect information asymmetry (Beatty & Liao, 2014).Despite the great importance of loan loss calculation method on banks’ financial reporting, few studies have examined the effectiveness of the current method used in Iranian banks. Additionally, research exploring the impact of changes in the loan loss calculation method on the quality of banks' financial reporting has been limited. Given this context, it becomes imperative to investigate the influence of this crucial variable on the quality of bank financial reporting. Conducting this research, particularly in Iran with its bank-oriented economy, can enhance the quality of financial reporting. This improvement would be achieved by selecting the optimal method for calculating loan loss reserves, thereby increasing the transparency of information in banks.Research Question(s)The main question of this research is as follows:Does the change in the bank loan loss reserves calculation method have a significant effect on the quality of banks financial reporting? Literature ReviewIn the current literature, two predominant views exist regarding the impact of changes in accounting methods on the quality of financial reporting. The first view posits that changing accounting methods, equated to adopting international accounting standards, enhances financial reporting quality. Conversely, the second view contends that there is either no relationship or a negative relationship between the adoption of new accounting methods and financial reporting quality. Mensah (2021) demonstrated a significant negative relationship between the use of new accounting methods and profit management, suggesting that methods endorsed by international accounting standards elevate the quality of companies’ financial reporting. This finding aligns with the conclusions of researchers like Nikhil et al. (2023), Ozili and Outa (2019), and Haapamakia (2018). On the contrary, Oppong & Bruce-Amartey (2022) examined the effects of new standards and corporate governance on accounting quality in Ghana, discovering that the implementation of new standards adversely impacts accounting quality. Similar conclusions were drawn by researchers like Suadiye (2017) and Campa & Donnelly (2016). MethodologyThis research employed a quantitative approach to examine the effect of changes in accounting methods on the quality of financial reporting. Initially, data was gathered using the current numbers of the financial statements of selected banks. Subsequently, the loan loss reserve calculation method was altered, and the research data was re-estimated using the new accounting method, aided by a transition matrix and the IFRS 9 formula. The research hypothesis was then tested using both datasets. The sample comprised data from 17 Iranian banks spanning the years 2017 to 2021. This data was collected using the Rahavard Novin database, the banks' financial statements, and analyzed using SPSS version 27 and EViews version 10 software, employing the least squares regression method. ResultsThe research findings reveal a significant negative relationship (at a significance level of 0.000) between the financial reporting system and discretionary accruals. This outcome suggests that a change in the method of calculating bank loan loss reserves, coupled with the adoption of a new method, leads to a decrease in discretionary accruals and in banks' earnings management practices. Additionally, the research indicates that the relationship between discretionary accruals and cash flow from operating activities, banks' profitability, and financial leverage is significantly negative. In contrast, the relationship between discretionary accruals and bank size is positive and significant. However, there appears to be no significant relationship between growth rate and asset turnover with discretionary accruals at the 5% significance level. DiscussionThe results of this research show that adopting the expected loss method, as opposed to the current method used in Iranian banks for calculating loan loss reserves, enhances the transparency of bank information and improves the quality of financial reporting. By reducing discretionary accruals, the new reporting system encourages banks to utilize fewer accruals, likely leading to a decrease in the use of profit management methods. Consequently, the adoption of IFRS in Iranian banks positively impacts the industry and its stakeholders. Furthermore, the research reveals that larger banks tend to employ discretionary accruals and engage in profit management more than smaller banks, a phenomenon potentially explained by the "political cost theory". ConclusionThe relationship between the quality of financial reporting and changes in bank loan loss reserves is positive and significant. Thus, the research hypothesis is confirmed, supporting the perspective of the first group (as discussed in the Literature Review section) in the context of Iranian banks. Based on these findings, it is recommended that the central bank mandate banks to disclose their reserves using the expected credit loss method as an initial step. Subsequently, banks whose reserves significantly deviate from the amounts calculated according to IFRS standards should be compelled to adjust their reserves over several years. This gradual approach aims to align the current reserves more closely with those calculated using the expected credit loss method.
Accounting and various aspects of finance
Ahmad Mahdavi; Ali Zabihi; Abassali Pouraghajan
Abstract
The purpose of this research is to evaluate the challenging areas of accrual accounting implementation in the General Department of the Ministry of Economy and Finance of Mazandaran province. The methodology of this study is mixed. In the qualitative part, through systematic screening, the challenging ...
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The purpose of this research is to evaluate the challenging areas of accrual accounting implementation in the General Department of the Ministry of Economy and Finance of Mazandaran province. The methodology of this study is mixed. In the qualitative part, through systematic screening, the challenging areas of accrual accounting implementation in the public sector are identified. Subsequently, these dimensions' reliability is assessed in two stages of Delphi analysis. Finally, in the quantitative part, through interpretive ranking analysis, the study seeks to evaluate the areas identified in the context of the General Department of the Ministry of Economy and Finance of Mazandaran province. The results of the study in the qualitative part indicated the existence of 9 challenging areas for the implementation of accrual accounting in the public sector, and during the process of fuzzy Delphi analysis, 8 criteria were confirmed as the reasons for the gap in the implementation of accrual accounting. Then, in the quantitative part, the study determined that the challenge of applying accounting standards of the public sector is a key factor in creating a gap in the implementation of accrual accounting in the General Department of the Ministry of Economy and Finance of Mazandaran province. The results also indicate that the public sector accounting standards, despite various amendments over the years, have tried to improve the implementation of accrual accounting in the public sector.IntroductionWith the emergence of accounting in the public sector, the nature and form of responsibility and accountability has changed so that organizations gradually moved towards transparency through accounting. These organizations were the guardians of public interests and had to consider themselves responsible for the needs of citizens. The dominant approach at the time of the formation of the role of accounting in the public sector was to focus on the cash basis. In doing so, public sector organizations tried to identify and disclose revenues and expenses identically and at the time of occurrence (Ismail, 2023). However, with the beginning of paradigm changes in the broad field of human sciences, this part of the accounting functions of the public sector has also changed, and many organizations have started moving towards the accrual basis in the disclosure of financial events from the mid-80s. In essence, accrual accounting has been considered the cornerstone of reforming financial information systems in public sectors. This shift was created in response to the acceptance of changes from traditional public management (PM) to modern public management (NPM), driven by the low efficiency of accountability and transparency systems. On the other hand, the emergence of legitimacy approaches, borrowed from business management to promote accountability in the public sector, has fueled the development of citizen rights management mechanisms in the last decade, transforming traditional public financial management (PFM) into modern public financial management (NPFM) (Dissanayake and Dellaportas, 2023). MethodologyIn terms of the results, this study is considered part of development research. This is because the issue of identifying the challenging areas of implementing accrual accounting in the public sector has been investigated in previous research as a main variable or complementary to other operational aspects of government accounting, such as budgeting, responsiveness, internal controls, and others. However, it has not been considered as a theoretical framework for explanation in the General Department of the Ministry of Economy and Finance of Mazandaran province. Conducting this study can help the development of theoretical and analytical literature in this field of study. The existence of this gap in the literature led us to present a model and evaluate the challenging areas of implementing accrual accounting in the public sector through the combination of qualitative and quantitative analysis processes. Therefore, in terms of the type of data, this study should be considered mixed, as the qualitative section identifies the challenging areas of accrual accounting implementation in the public sector through systematic screening, and Delphi analysis is used to confirm the reliability level of the identified dimensions. Then, based on the process of interpretative ranking analysis in the quantitative part, the study seeks to evaluate the challenging areas of accrual accounting implementation in the General Department of the Ministry of Economy and Finance of Mazandaran province. ResultIn this study, an effort was made to identify the most relevant dimensions that contribute to gaps in the implementation of accrual accounting in the public sector. This was achieved through systematic screening of research literature and a subsequent Delphi analysis for reliability assessment of these dimensions. Then, through interpretive ranking analysis, the study aimed to determine the most challenging areas in implementing accrual accounting in the General Department of the Ministry of Economy and Finance of Mazandaran Province. The specific analysis revealed that the challenge of applying public sector accounting standards is the most significant factor contributing to the gap in the implementation of accrual accounting in the General Department of the Ministry of Economy and Finance of Mazandaran Province. ConclusionIn interpreting these results, it should be noted that although the public sector accounting standards have undergone various amendments over the years to improve the implementation of accrual accounting, there remains a lack of coverage in aspects of compliance with Clause (d) of Article (28) of the Accession Law. Certain provisions in the law that regulates a part of the government's financial regulations (2), specifically those concerning spending credits and acquisition of capital assets, suggest that the absence of distinct headings in alignment with the program and budget organization could facilitate the reallocation of resources to different expenditure categories within organizations. This is an issue in the public sector for which a specific mechanism, as per Article (30) of the Program and Budget Law, has not been approved, thus impacting the ability to commit and accurately allocate credits and expenses for capital assets. Additionally, although Circular No. 210786/57, dated 11/7/2014, was issued to public sector organizations to address the obligations of excess reporting and credit allocation for saving realized costs, there exists an implementation gap in this directive. This gap affects the supervisory role in liability obligations, leading to an excess in credit allocation often recorded under other debt headings instead of being classified as reserves for realized expenses or capital obligations.
Accounting report
Farzad Eivani; Hadis Abdi; Farshid Kheirollahi; nasrin moridi
Abstract
Integrated financial reporting provides crucial information about an organization's strategy, direction, performance, and future outlook encompassing business, social, and environmental performance within its operational context. It also promotes a coherent and effective approach to corporate reporting. ...
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Integrated financial reporting provides crucial information about an organization's strategy, direction, performance, and future outlook encompassing business, social, and environmental performance within its operational context. It also promotes a coherent and effective approach to corporate reporting. This research aims to compare the expectations of integrated financial reporting producers and users. Data analysis using SPSS software and statistical tests, including "Kolmogrove-smirnov", "Yoman-whitney" and "Friedman" has shown significant differences between the opinions of users and financial report preparers regarding report components, innovative practices, targeted investments, rewards and benefits, risk management, governance structure, and balanced scorecard. However, the comparison of expectations has shown no significant difference between the expectations of report providers and users regarding providing reports on mutual communication, compliance with legal and ethical standards, user’s engagement, and the reporting of financial status and sustainability of financial services.IntroductionAn integrated report should provide insight into the nature and quality of an organization's relationships with its key stakeholders. According to the International Integrated Reporting Council (IIRC), one of the guiding principles which underpin the preparation of integrated reports is the formation of effective stakeholder relationships. However, several challenges are also identified. These challenges include difficulties in determining what information is material and should, therefore, be included in an integrated report. This paper contributes to the ongoing debate on the quality and utility of integrated reporting by exploring the possibility that a perception gap has emerged, which affects the perceived relevance of integrated reporting. this paper makes an important contribution to the prior literature on integrated reporting by introducing the idea of a perception gap and offering one of the initial accounts of stakeholders’ perspectives on companies’ integrated reports. This will shed light on where companies can improve their integrated reports and inform the development of additional guidance by standard-setters and regulators.MethodologyThe study's statistical population comprises two groups: report producers and users. This includes auditors from the audit organizations and audit institutions, members of the Society of Official Accountants of Iran, as well as board directors and managers of companies listed on the Tehran Stock Exchange during the year 2022. The sampling method employed in this research is available sampling. This research is classified as a descriptive-survey study with an applied approach. The identified themes are incorporated into a Likert scale questionnaire. Lastly, the collected data were analyzed using SPSS software and relevant statistical tests.FindingsBased on the findings, there is a gap between auditors' and users' perspectives in terms of reporting and identifying innovative perspectives, targeted investments, rewards and benefits, risk management, governance structure, and balanced scorecard. Conversely, no significant gap is anticipated between the perspectives of producers and users in terms of mutual communication, compliance with legal and ethical standards, streamlining financial operations, user communication, as well as reporting financial status and corporate sustainability.Conclusion and discussionIn line with the examination of expectations between providers and stakeholders concerning the disclosure of integrated reporting components, the results of hypothesis testing indicate that, except for reporting and identifying innovative perspectives, targeted investments, rewards and benefits, risk management, governance structure, and balanced evaluation card, there is no significant expectation gap between beneficiaries and providers. In fact, the results indicate that users of integrated reports seek additional information on matters such as the competence and performance of those responsible for governance and how management has handled risk to ensure financial sustainability and prevent financial crises. They prioritize these aspects over the disclosure of information about social and environmental issues.Finally, the results of this study highlight several areas for future research. It would be valuable to investigate whether a perception gap exists in other industries and to identify the factors contributing to changes in the perception gap. More work also needs to be done to understand the determinants of the perception gap. This paper is based on the assumption that user sophistication affects the perceived importance of disclosures found in integrated reports. Cultural variables, the nature of the corporate governance system and the extent to which companies are able to manage perceptions are additional variables which need to be taken into account in order to define the dimensions of the perception gap in an integrated reporting context more accurately and inform policymakers and standard setters.
Accounting report
Mohammad Javad Salimi; Ghassem blue; Maghsoud Amiri; Hamed Zakeri
Abstract
The earnings forecasts report is considered as one of the most important and effective reports in investors' decision-making. The purpose of this study is to present an earnings forecasts reporting framework in Iran's capital market. To achieve this research goal, the earnings forecasts reporting framework ...
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The earnings forecasts report is considered as one of the most important and effective reports in investors' decision-making. The purpose of this study is to present an earnings forecasts reporting framework in Iran's capital market. To achieve this research goal, the earnings forecasts reporting framework was identified first by studying the theoretical foundations and the background of the research, as well as interviewing 21 experts using the snowball method and the theme analysis method. Then, through the implementation of the fuzzy Delphi method and solicitation of opinions from 183 experts using a questionnaire and targeted judgmental sampling method, a consensus was reached on the reporting framework, resulting in the presentation of the earnings forecasts reporting framework in Iran's capital market. The research population included university faculty members, employees in regulatory organizations, investors, auditors, and providers of financial information. The research results showed that out of 122 detailed themes extracted through theme analysis, categorized into six main themes and 14 sub-themes, 97 detailed themes obtained the consensus among the Delphi group, thereby forming components of the earnings forecasts reporting framework. The main elements of the earnings forecasts reporting framework encompass generalities, environmental fields, characteristics, consequences, challenges, and evaluation. The findings of this research can serve as a guide for developing financial reporting standards and modifying procedures and regulations.IntroductionThe management forecasts earnings is one of the disclosed information outside the financial statements, which reflects the management's forecast about the future prospects. This report is one of the most important sources of information for companies in the capital market. Corporate management possesses considerable information advantages about contingencies related to future profitability. Management disclosures are considered a valuable and potential source of information for investors. Investors are interested in estimating the future benefits of their investment so that they can assess receiving future cash earnings as well as the value of their shares. Therefore, the expected earnings from companies are important for investors and beneficiaries to make investment decisions.How to present the earnings forecast report has been a challenging issue in recent years. Therefore, in the current situation, examining the framework and reporting method of earnings forecasting in the Iranian capital market using the opinions of experts is regarded as an essential need.Considering the importance of earnings forecast reporting for investors, the problem of the current research is: What is the earnings forecast reporting framework in Iran's capital market? Additionally, what are the components of this framework based on the country's economic and capital market conditions? Literature ReviewThere are several reasons for disclosing the information of managers and publishing the earnings forecast report. One reason for this is agency theory, which refers to the conflict of interests between managers and owners. In addition, we can refer to the Signaling theory, Expectation adjustment hypothesis, and Legal liability hypothesis.The primary framework of earnings forecasting reporting includes the purpose, users, limitations, environmental fields, characteristics, and consequences.Hirst et al. (2008) provided a framework regarding management earnings forecasting. They categorized earnings forecasts into three components including antecedents, characteristics, and consequences. They concluded that earnings forecasting characteristics are less explored in both theoretical and empirical research, despite managers having the most control over this component.Preussner and Aschauer (2022) synthesized the literature on management earnings forecasts and adaption mechanisms, combined existing theories into a unifying framework. Overall, the literature review provides strong support for a positive correlation between the extent and credibility of management earnings forecasts, on the one hand, and stock returns, share liquidity, and analyst coverage, on the other hand. Earnings forecasts tend to be optimistically biased, with a positive correlation with forecast uncertainty, earnings flexibility, financial distress, investor sentiment, and the share price dependency of managers' remuneration. Firm growth, legal liability, and litigation risk are significantly associated with forecast pessimism.Until 2017, listed companies in Tehran Stock Exchange published an independent report titled earnings forecasts report. The Securities and Exchange Organization announced in a notification that since January 2018, the Issuers are not allowed to publish earnings forecasts report. Instead, they are required to prepare and disclose the management's interpretive report alongside the interim and annual financial statements. Recently, as of July 2021, the return of the earnings forecast report was announced with a new procedure for five industries.MethodologyTo achieve the goal of the research, the primary framework was first identified by studying the literature review and theoretical background. Semi-structured interviews were then conducted with 21 experts using the snowball sampling method. The data from the interview was analyzed using the theme analysis method and the earnings forecasts reporting framework was extracted according to the country's environmental characteristics. Finally, the fuzzy Delphi method was implemented and opinions were gathered from 183 experts through a questionnaire and targeted judgment sampling method to reach a consensus on the earnings forecasts reporting framework.The statistical population of the research included university faculty members, employees in regulatory organizations, investors, auditors, and providers of financial information.ResultsThe research results showed that out of 122 detailed themes extracted through theme analysis, which were categorized into 6 main themes and 14 sub-themes, 97 detailed themes obtained consensus from the Delphi group and were identified as components of the earnings forecasts reporting framework. The main themes of the framework are generalities, environmental fields, characteristics, consequences, challenges, and evaluation. Each main theme consists of sub-themes. For example, the generalities theme includes sub-themes such as purpose, users, and limitations. The environmental fields theme covers aspects related to the forecast environment and company characteristics. The characteristics theme encompasses the method of publishing, features, text of the report, and assurance. The consequences theme addresses the consequences of publishing and non-publishing. The challenges theme explores the challenges in the environment and the company. Lastly, the evaluation theme focuses on the evaluation of the disclosure procedure.DiscussionThe findings of this research can serve as a valuable guide for developing financial reporting standards and modifying procedures and regulations.The paper has some limitations. The use of questionnaires, which is common in humanities research, is inherently limited, and this research is no exception. The time limitation, the diverse knowledge base of the experts, and their interest in the research topic may have influenced the quality of the experts' responses to the questionnaire.ConclusionThis research has presented the earnings forecasts reporting framework in Iran's capital market, consisting of 6 main themes. The results of this study can help Iran's Accounting Standards Development Committee in developing standards. Furthermore, the Securities and Exchange Organization can use the framework, particularly for the evaluation theme to modify and present regulations related to earnings forecasting reporting. Additionally, investors can use the results of this research to enhance their understanding about the earnings forecast report and make more informed investment decisions. Issuers can also use the framework to improve information disclosure and prepare reports.AcknowledgmentsI am grateful to all the esteemed professors and experts who helped me in this way. I would also like to express my gratitude to the staff of Allameh Tabataba’i University for their cooperation.
Accounting report
Mozaffar Jamalianpour
Abstract
The importance and role of Media and NEWS are increased by improvement of Information and Communication Technologies. This article try to find role of medias’ news in corporate earning management strategies. So, I investigate for show impact of media coverage on replacement and trade off between ...
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The importance and role of Media and NEWS are increased by improvement of Information and Communication Technologies. This article try to find role of medias’ news in corporate earning management strategies. So, I investigate for show impact of media coverage on replacement and trade off between Accrual Earning Management (AEM) and Real Earning Management (REM) (Earning Management Strategy). For this purpose, I collect NEWS about listed companies during 2015 until 2020 and used Heckman's Two-Step for measure replacement between AEM and REM. I used Different in different and Feasible Generalized Least Squares (FGLS) methods for hypothesis testing.Results show that earning management strategies are different in reaction of media coverage. Increase of media coverage cause companies decrease AEM but they use REM more than usual in this position. In additional, research findings show that companies with higher media coverage and suspect to earning management try to more change in board of directors. So, results show that media has controlling and pressure effect on companies for earning management’s strategy.
Accounting report
Masoumeh Shahsavari; Mohammad Reza Abbaszadeh; Hamze hesari
Abstract
In the present study, the relationship between the qualitative information of the auditor's report and the quality of accounting has been discussed. In particular, the relationship between the tone of the auditor's report and the audit fee (audit quality criterion based on the input of the audit process) ...
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In the present study, the relationship between the qualitative information of the auditor's report and the quality of accounting has been discussed. In particular, the relationship between the tone of the auditor's report and the audit fee (audit quality criterion based on the input of the audit process) has been examined with respect to the concepts of risk, client business risk, and litigation risk. To test the research hypotheses, 360-year-firms data of Iranian Stock Exchange were used during a period of 6-years, three years before and three years after the revision of Auditing Standard No. 700. Textual data were analyzed using Maxqda10 text analysis software and after quantification along with other quantitative data were analyzed using multivariate linear regression in Ives software and SPSS Eviews 9. The results indicate a weak inverse relationship between the optimistic tone and the audit fee variable. In addition, the findings showed that the acceptance of the requirements of Auditing Standard No. 700 does not make significant changes in the relationship between the tone of the auditor's report and the remuneration compared to the period before the review. In general, the results of the research indicate evidence of the predominance of the signaling effect (albeit poorly) in the sample.
Accounting report
iman zare
Abstract
Improving the quality of financial reporting is one of the effective factors to approach an efficient capital market and optimal capital allocation, the present research tries to explain the quality of financial reporting from the perspective of adjusted structuration theory. The adjusted structuration ...
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Improving the quality of financial reporting is one of the effective factors to approach an efficient capital market and optimal capital allocation, the present research tries to explain the quality of financial reporting from the perspective of adjusted structuration theory. The adjusted structuration theory explains social systems, including accounting, with an ethical approach and considering the dual relationship between agency and structure.The current research is quantitative in terms of implementation method. In the quantitative part, the correlation method based on confirmatory factor analysis and structural equation modeling was used. The statistical population of the research includes university faculty members and financial managers 154 people were selected by available sampling method. The research tool is an extractive questionnaire from research literature. The analysis of data in the quantitative part in the form of structural equation model showed that the relationship between agency and accounting structure with the quality of financial reporting is strongly significant and agency has a higher rating in this relationship, this relationship is due to the influence of an opinion based on ethics with the first rank, decision-making with the second rank and accountability with the third rank will be from the direction of agency and structure on the quality of financial reporting. the accounting system with emphasis on adjusted structuration Theory increases the quality of financial reporting by providing a comprehensive theoretical framework based on the usefulness and ethics of the accounting system as well as the usefulness of information for decision making.
Accounting report
Ali Saqafi; Ghasem Blue; HosseinAli Sohrabi Varzaneh
Abstract
Development of Earnings quality measures, especially Accruals quality measures, has been a critical line of research over more than three decades. Literature indicates that linear-regression-based measures are subject to (suffer from) significant estimation error in non-discretionary accruals estimation. ...
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Development of Earnings quality measures, especially Accruals quality measures, has been a critical line of research over more than three decades. Literature indicates that linear-regression-based measures are subject to (suffer from) significant estimation error in non-discretionary accruals estimation. Therefore, recent research used machine learning algorithms including multilayer perceptron and radial basis neural networks, in order to address the issue. However, being founded on Blackbox approach limits future development and applicability of these methods. So, to address the limitations, we have used Group Method of Handling Data (GMDH) approach, as a Whitebox approach, in order to estimate the accruals. Findings using data from 299 Tehran Securities Exchange listed companies during 1385 to 1397 suggests that GMDH-based models perform superior to regression models and multilayer perceptron neural networks in terms of estimation error measured by mean squared error. Moreover, Cash flow approach in total accruals calculation leads to less estimation error compared to balance sheet approach. As a result, the model developed in this article can be used by market participants such as regulators, analyst and auditors in order to detect probable financial reporting misstatements.
Accounting report
Ali Rahmani; Azam Valizadeh Larijani; Elham Rabihavi
Abstract
The need for a set of qualified accounting standards has led to the development of international financial reporting standards. like many other countries globally, Iran has adopted these standards and required their application in a group of capital market companies. The main purpose of this study is ...
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The need for a set of qualified accounting standards has led to the development of international financial reporting standards. like many other countries globally, Iran has adopted these standards and required their application in a group of capital market companies. The main purpose of this study is to examine the challenges and benefits of implementing International Financial Reporting Standards from the perspective of the executives who are required to use the standards. The statistical population of this study, consisting of managers of banks, insurance companies and, stock exchange companies, are required to comply with IFRS according to the enactment of the Stock Exchange and Securities Organization, which includes a total of 77 companies. The collection tool of this research is a questionnaire that was distributed from September to October 2016. The answers to 59 questionnaires were received from 77 distributed questionnaires. For banks, the biggest challenge was the cost of training at the level of companies and users of financial information, for insurers it was the difference between tax laws and international financial reporting standards, and for other companies, the lack of accountants and auditors that have the technical skills of implementing international financial reporting standards.
Accounting report
Elnaz Akbarlou; Mehdi zeynali; Mehdi alinezhad sarokolaei; Rasoul baradaran hassan zadeh
Abstract
Narcissist managers, with behavioral characteristics such as selfishness, domination, and self-aggrandizement, don’t consider rules and regulations important. They manipulate detailed accounting reports opportunistically using positive words in an optimistic manner. This study aims to investigate ...
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Narcissist managers, with behavioral characteristics such as selfishness, domination, and self-aggrandizement, don’t consider rules and regulations important. They manipulate detailed accounting reports opportunistically using positive words in an optimistic manner. This study aims to investigate the relationship between managers' narcissism and the optimistic tone of financial reporting with the moderating role of earnings management. To measure narcissism, two proxies are used: the area of managers’ signatures and the ratio of managers' remuneration to the total annual salary of employees, and vocabulary frequency as a criterion to measure optimistic tone. The sample includes 115 companies listed in Tehran Stock Exchange throughout 2011- 2018. To test the research hypotheses, regression has been used. Results indicate that there is a positive and meaningful correlation between the narcissism of managers and the optimistic tone in financial reporting. In other words, narcissist managers consider financial reports prepared based on an optimistic tone as an opportunity to satisfy their insatiable desire for self-promotion. Earnings management has got a positive moderating effect on the correlation of narcissism of managers and optimistic tone in financial reporting.
Accounting report
maryam yokhanehalghyani; jamal bahrisales; Saeid Jabbarzadeh Kangarluei; Akbar Zavari Rezaei
Abstract
Companies sometimes file fraudulent financial statements for tax fraud. The purpose of this study is to combine data mining tools and artificial intelligence with meta-heuristic algorithms to explain and optimize a model for detecting fraud and tax evasion by using the capacity of financial reporting. ...
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Companies sometimes file fraudulent financial statements for tax fraud. The purpose of this study is to combine data mining tools and artificial intelligence with meta-heuristic algorithms to explain and optimize a model for detecting fraud and tax evasion by using the capacity of financial reporting. Qualitative and quantitative indicators of financial reports of 1056 year- companies in the Tehran Stock Exchange in the period of 2006 to 2019 were studied in the classical approach and used to expand the model in the Adaptive Neural-Fuzzy Inference System. Findings show that in optimization with genetic algorithm, particle swarm optimization algorithm and differential evolution algorithm, the most efficient model is obtained by particle swarm algorithm, which is the most efficient algorithm in the study with experimental and educational data. The results indicate that the application of different optimization algorithms in the data mining approach increases the predictive power of the fraudulent financial-tax reporting identification model
Accounting report
Fahime Ebrahimi; Mohammad Hosein Setayesh; Hamidreza Zareifard
Abstract
Prospect theory explains how individuals’ feelings and preferences influence their decision-making. The purpose of this research was to investigate earnings manipulation incentives within companies listed in Tehran Stock Exchange using fourfold pattern of risk attitudes provided by the cumulative ...
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Prospect theory explains how individuals’ feelings and preferences influence their decision-making. The purpose of this research was to investigate earnings manipulation incentives within companies listed in Tehran Stock Exchange using fourfold pattern of risk attitudes provided by the cumulative prospect theory. The period of this research was 6 years, from 2013 to 2018 and included 695 observations. Hypothesis testing using logistic regression, with the average competitor performance within the industry as the reference point, revealed a significant positive (vs. negative) effect of management’s loss (vs. gain) estimates relative to the reference point on earnings manipulation. In other words, when management’s estimate of the likelihood of loss relative to the reference point is high (vs. low), the likelihood of earnings manipulation increases (vs. decreases). Furthermore, when management’s estimate of the likelihood of gain relative to the reference point is low (vs. high), the likelihood of earnings manipulation increases (vs. decreases). The findings of research also provided evidence for loss-aversion among managers. Therefore, the evidence suggests that the cumulative prospect theory can be utilized to explain managerial incentives for earnings manipulation.
Accounting report
Alireza Rahrovi Dastjerdi
Abstract
Since the volume of corporate information disclosures is constantly increasing, this study seeks to distinguish information with a "text" nature from information with a "numbers" nature to examine the existence and the direction of the volume of these two types of information on the efficiency of the ...
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Since the volume of corporate information disclosures is constantly increasing, this study seeks to distinguish information with a "text" nature from information with a "numbers" nature to examine the existence and the direction of the volume of these two types of information on the efficiency of the stock price formation in companies. This study also deals with the effect that the volume of these two types of disclosed information have on each other in the process of price formation. However, it does not concentrate on the quality of the content of accounting information and its usefulness. The research sample consists of 169 companies listed on the Tehran Stock Exchange in 1397 (Iranian calendar). Research hypotheses were tested cross-sectionally using ordinary least squares regression. The results revealed that the amount of disclosed information, whether in the form of "text" or "numbers," in general, does not significantly affect the efficiency of the process of the companies' stock price formation in the Iranian capital market. Also, the volume of these two types of information cannot strengthen the influence of each other on the efficiency of the stock price formation process. In addition to expanding the accounting literature in the areas of "disclosure" and "market efficiency," the results of this study contain significant achievements for policymakers, analysts, shareholders, and company managers regarding the volume of information disclosure. The users' ability and the disclosure quality are also some other factors that should be considered when deciding whether to increase the volume of disclosure.
Accounting report
Mojtaba Golmohammadi shuraki; Abolfazl Zare Mehrjardi
Abstract
Audit fee, which is one of the signs of an audit effort, is an important factor in the acceptance or rejection an audit by owners and auditors. The characteristics of the client and especially the characteristics of financial reporting are important factors that can affect the timing of the audit and ...
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Audit fee, which is one of the signs of an audit effort, is an important factor in the acceptance or rejection an audit by owners and auditors. The characteristics of the client and especially the characteristics of financial reporting are important factors that can affect the timing of the audit and subsequently the audit fee. The main purpose of this research is to investigating the relationship between accounting comparability (as qualitative financial reporting characteristic) and audit fees. For this purpose, a sample of 70 companies listed in Tehran Stock Exchange between 2015 and 2019 has been studied. Research hypotheses have been tested using regression analysis based on cross-section data. Evidence research shows that there is a negative and significant relationship between the accounting comparability and audit fees. This conclusion can be interpreted in terms of inherent risk of audit and information efficiency, because accounting comparability reduces audit risk and evidence acquisition costs. Also, the results show that there is a significant negative relationship between comparability and audit delay. In addition, the results suggest that there is not a significant negative relationship between audit fees and board independent, ownership concentration and institution ownership as corporate governance mechanisms.
Accounting report
Navid Reza Namazi; Pedram Azizi
Abstract
The purpose of this study is to investigate the moderating effect of auditing quality on the relationship between financial reporting quality and initial public offerings (IPOs) underpricing of stocks. The population of this study is the companies listed on the Tehran Stock Exchange (TSE) and OTC of ...
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The purpose of this study is to investigate the moderating effect of auditing quality on the relationship between financial reporting quality and initial public offerings (IPOs) underpricing of stocks. The population of this study is the companies listed on the Tehran Stock Exchange (TSE) and OTC of Iran. The statistical sample consists of 230 companies in the period of 18 years, from 2001 to 2019. The results showed that on average, 25% of the initial public offering underpricing of stocks occurs in the Iranian capital market. In addition, the findings of the regression analysis using the E views software indicated that the financial reporting quality has a negative and significant effect on the initial public offerings underpricing of stocks. In other words, the high financial reporting quality prevents the initial public offering underpricing. It was also found that audit quality (in terms of the type of auditor's opinions) enhances the relationship between financial reporting quality and the initial public offerings underpricing of stocks. However, the size of the audit firm and the auditor's tenure do not moderate the relationship.
