Introduction There is an ambiguity about future state of the firms and capital market in conditions of uncertainty. In such a situation, the arrival of any information signal such as earnings announcement may reduce uncertainty leading to a revision of the previous beliefs of investors. Uncertainty could be divided into two groups: market uncertainty and information uncertainty. Investors’ reaction to earnings announcement may be different in these two situations. Under high market uncertainty, firms’ earnings announcement as an information signal may have a greater impact on investors' beliefs and, as a result, leads to more investors’ reaction to firms’ earnings announcement. However, more accurate information signals have a stronger impact on investors' beliefs. In other words, there is under reaction to earnings announcement, when announced earnings contain high uncertainty. Therefore, this study attempts to investigate investors’ reaction to earnings announcement with regards to market and information uncertainty. In addition, this study examines simultaneous effect of these two types of uncertainty on the investors 'reaction to earnings announcement. Hypotheses According to the literature, the research hypotheses include: H1: Under high market uncertainty, investors’ reaction to earnings announcement is higher than low market uncertainty. H2: Under high information uncertainty, investors’ reaction to earnings announcement is less than low information uncertainty. H3: Investors’ reaction to earnings announcement under market uncertainty decreases with an increase in the level of information uncertainty.
Methods In this study, in order to calculate the variables and test the hypotheses, required data was collected from the audited financial statements and its footnotes of listed companies in the Tehran Stock Exchange and the existing databases including “Rahavard Novin” and “Codal”. The sample of this study consists of 162 listed companies in Tehran Stock Exchange from 2005 to 2015. Market uncertainty was measured by the standard deviation of daily market returns during the one month prior to the firms’ earnings announcement. Information uncertainty was calculated by two criteria including quality information and cash flows volatility based on matched-firm design. Panel data method and Wald test were used to estimate models and test of hypotheses, respectively.
Results Results showed the higher market uncertainty (compared to lower uncertainty), the more investors' response to firms’ earnings announcements. Results also showed, the higher information uncertainty (compared to lower uncertainty), the less investors' response to firms’ earnings announcements. Moreover simultaneous analysis of the "market and information" uncertainty on the investors' reactions to earnings announcements showed although investors' responses to earnings announcements decrease on the high information uncertainty situation, yet unexpectedly, the coefficient of unexpected earnings in the high market uncertainty is less than its coefficient in the low market uncertainty.
Discussion and Conclusion Previous studies often focus on the market uncertainty or the information uncertainty. There are few studies that examine the simultaneous effect of these two types of uncertainty. Therefore, the aim of this study was investigating investors’ reaction to earnings announcement considering both market and information uncertainty. In the first hypothesis, we investigated investors’ reaction to earnings announcement, when market uncertainty is high. Results showed, investors show more reaction to earnings announcement under high market uncertainty. Therefore, the first hypothesis is not rejected. Results of the second hypothesis indicated when firms’ information such as accounting earnings is ambiguous and uncertain, there are less investors’ reaction to earnings announcement and the second hypothesis is also not rejected. Moreover, simultaneous analysis of both uncertainty on the investors' reaction showed although investors' responses to earnings announcements decrease by an increase in the information uncertainty, but unexpectedly, investors show less reaction, when there is a high market uncertainty. It may be due to behavioral bias or lack of investor knowledge for analyzing information. Therefore, the third hypothesis is rejected.
Introduction The desire to gain long-term benefits in the field of professional credit and earnings has led to considering audit quality as a factor of increasing professional competitiveness in audit services' market from the viewpoint of auditors, and from this perspective, this has been considered in conducted studies. Palmrose (1988) defined the quality of the audit as follows: ensuring the financial statements is audit quality and the financial statements are free from any significant misstatement". This definition emphasizes the result of the audit, because the ability to rely on financial statements before the audit cannot be specified; therefore, the actual quality of the audit cannot be observed and cannot be evaluated until the audit has reached its result (Hasas Yeganeh and Azinfar, 2010). Titman and Trueman (1986) also believe that since actual audit quality cannot be observed before auditing or during auditing, there is a need for variables to evaluate the actual quality of the audit. Although many factors affect the quality of audit services, few studies have been conducted to create a conceptual framework or model for describing the structure of quality of audit services. In recent decades, some of the studies conducted in the field of audit quality have attempted to provide an analytical framework based on audit regulations in European countries, as well as the results of previous studies, including Carcello et al. (1992), Knechel et al. (2013). Of course, the study results of Francis (2011) and Gonthier Besacier et al. (2016), which provide the analytical framework for a more complete audit quality according to the results of previous studies and European audit regulations (especially French), and are more similar to Sarbanes Oxley regulatory texts, have been great efforts in this field. This study by formulating factors affecting the quality of audit according to the results of studies conducted and solutions presented in Iranian auditing standards regarding the quality improvement of audit services and presenting them in the form of a conceptual model attempts to consider single and distributed factors affecting the quality of audit based on previous studies in the form of the main and operational factors.
Hypotheses The hypotheses of this research are as follows: H1:Audit operations affect audit quality. H2:Audit group activity affects audit quality. H3:Auditing rules affect audit quality.
Methods The information needed to test the research hypotheses have been obtained through a researcher-made questionnaire. The first statistical population of this study consists of CPA’s working in an independent audit profession as managers, senior managers, supervisors and senior supervisors (in the audit firm), partners, technical managers, audit supervisors and senior supervisors (in private audit firms), and the second statistical population of this study consists of financial managers of all investment companies that operate under the supervision of Securities and Exchange Organization. The sampling method in this study is a categorized probability sampling method for the first statistical population of this study. The subjects are selected from all classes conveniently. For this reason, we used Cochran formula to estimate the sample size in each class of the statistical population. Among the numbers obtained as the sample size of each class, the largest value was chosen as the final sample size. The final sample size obtained from this study was n = 205 for the first statistical population and n = 74 for the second statistical population of all investment companies operating under the supervision of Securities and Exchange Organization and questionnaires were distributed to respondents through in person referring and / or sent by email. After distributing the questionnaires, in total, 174 questionnaires were collected. 6 questionnaires were unusable due to failure to answer all questions, and a total of 168 questionnaires were used in statistical analysis. Regarding the theoretical concepts presented on the quality of the audit, this concept cannot be observed; therefore, the dependent variable is hidden and endogenous, and the independent variables are also hidden, but are exogenous. Consequently, the evaluation of the conceptual model of the research to study the research hypotheses based on the structural equations modeling with partial least squares approach was conducted to study the causal relationships between the invisible and hidden variables with interwoven relationships.
Discussion and Conclusion The factors affecting the audit quality in three fields of audit operations, audit regulations and audit group are presented in the form of a conceptual model based on the analytical framework based on previous conducted studies. Regarding theoretical concepts of audit quality, this concept cannot be observed. As a result, the evaluation of the conceptual model of the research to test the research hypotheses based on the structural equations modeling with partial least squares approach was used to study the causal relationships between the visible and hidden variables with interwoven relationships including four reflective measurement models and a structural model. After testing validity and reliability of reflective measurement models, the general test of these models and testing the quality of the structural model for the research hypotheses, it was found that the null hypothesis was rejected in the test of all three hypotheses that is the claim contradiction, indicating that all the hypotheses of the research were confirmed and the above factors affect the quality of audit services. The results also indicate the general utility of the general structural model designed to predict the factors affecting the quality of the audit services. According to the conceptual model, 20 qualitative features were presented to review them. The study of the effects of all exogenous independent variables (audit operations, audit group and audit regulations) on the endogenous dependent variable of the model (audit quality) showed that the independent variable of audit operations with a direct effect factor of 0.431, independent variable of the audit group with a direct effect factor of 0.299 and independent variable of audit regulations with a direct effect factor of 0.253 in total could explain 79.6 percent of the total variation in audit quality.
The purpose of the present study is to develop a comprehensive optimal portfolio model using accounting information analysis, value-based information and balanced scorecard information. The statistical population of the research is the companies listed in Tehran Stock Exchange during the period 2007-2017. In order to achieve the objectives of the research, the formulation of dimensionality reduction, data envelopment analysis methods, backing vector machines, and clustering algorithms were used. The above model was implemented in four steps and in each step besides risk and return component, accounting criteria, value based criteria and financial criteria and then non-financial balanced scorecard were used as input step by step portfolio model. The findings of the research indicate that the criteria used in the research for optimizing the portfolio of stocks have informational content and the addition of each set of criteria leads to an increase in the efficiency of the portfolio. This information content of the balanced scorecard is even more impressive. Overall, the simultaneous application of hybrid optimization methods and comprehensive benchmarks extracted from financial reports resulted in a more optimized portfolio and higher risk-taking and Markovitz literature returns. * Corresponding author: Mehdi Arab Salehi Associate Professor of Accounting, Esfahan University, Iran. 1- Introduction One of the main goals of accounting is providing information for use in investment decisions. The discovery of the value of information provided by accounting systems is one of the major axes of empirical studies in the field of financial and accounting knowledge. Given the constraints on investment resources, if investors invest all their resources in a particular asset, they will increase the risk of losing their resources, which is not, in their view, desirable. Therefore, the main problem for investors is the determination of a set of securities that leads to maximization of wealth. This also leads to the selection of the optimal stock portfolio from a set of stock portfolios in order to maximize the benefits to shareholders. The effective components of choosing the optimal stock portfolio are two main factors: the criteria used in stock portfolios and the approach of choosing stock portfolios. In this research, we focus on choosing the optimal portfolio based on a comprehensive model including accounting information, value-based information and balanced scorecard information and a dimensionality reduction approach.
2- Research Question Is it possible to use a comprehensive set of analysis of accounting information, value-based information and a balanced scorecard information, and using the Dimension Reduction Approach to create an optimal stock portfolio model, so that this model would increase shareholders' returns? 3- Methods The research methodology is a quantitative research that uses the scientific method and empirical evidence, and based research designs is done. The empirical data was collected from a panel consisting of 103 Iranian companies listed in TSE, over the seven-year period of 2007 to 2017. The criteria used in this study are accounting information, value-based information and balanced scorecard information. In order to achieve the research goals and to create optimal stock portfolios, we used Data Envelopment Analysis, Support Vector Machine and Anomaly Clustering algorithms. The above method was implemented in four stages. At each stage, in addition to the risk and return components, we used accounting information, value-based information and balanced scorecard information as a step-by-step portfolio input. 4- Results The findings of the research indicate that the criteria used in the research to provide the stock portfolio are informative and adding each category of criteria will lead to an increase in the utility of the stock portfolio. In addition, this in formativeness has increased significantly with the balanced scorecard. Generally, the simultaneous use of hybrid optimization techniques and comprehensive criteria derived from the financial stock portfolios were more optimal and more favorable than the risk and efficiency of the Markovitz literature.
Fair value accounting for valuation of assets and liabilities has given managers the discretion.The purpose of this study is to investigate the effect of manager’s discretion allowed in fair value measurement on investment selling decisions. In order to test the research hypotheses, a questionnaire based on the scenario was used. This questionnaire is based on Green et al. (2015). The statistical population consists of all active financial analysts in investment companies and stock exchange brokers and the statistical sample of the study was determined using the sample size tables of Cohen et al. (2000) of 268 people. Multivariate analysis of variance (MANOVA) and univariate analysis of variance (ANOVA) were used to analyze the data and test hypotheses. The results of this study showed that conservatism and its interaction with the fair value volatility have a significant effect on the investment selling decisions based on fair value, but the fair value volatility has no significant effect on these decisions. Overall, the results of the research showed that the directors' discretions in fair value accounting affects investment selling decisions. 1- Introduction Accounting academics and practitioners have been debating the reliability and relevance of fair value accounting. According to Financial Accounting Standards, fair value accounting, often referred to as mark-to-market occurs when a firm revalues assets and liabilities based on an exit price. Advocates contend that fair value provides valuable and timely information to financial statement users by increasing transparency that aid in assessing firm value. In contrast, opponents argue that fair value is transitory because once the asset or liability is traded, the related accounting entries are reversed (Green, 2015). Thus, fair value may provide misleading and unreliable information. In particular, Level 3 fair value assets have no observable inputs and are valued by managers’ assumptions, thus the fair value is subjective (Zyla, 2013). Level 3 fair values are unique in that subjective assumptions that are necessary to arrive at the fair value are based on unobservable inputs. According to the IASB codification glossary, unobservable inputs are defined as “market data that are not available and that are developed using the best information available about the assumptions that market participants would use 2 when pricing the asset or liability”. Depending on the valuation method selected, discretion can include the expected life of the asset or liability, the cash discount rate, and risk return rates (Zyla, 2013). This discretion can affect financial statements. Prior reserch has established that factors such as earnings management (Dechow and Shakespear, 2009, Dechow et al, 2010), optimism (Kedia and Philippon, 2009), national culture (Ball et al., 2000), fear of litigation (Lobo and Zhou, 2006), and auditor compliance (Milbradt 2012) influence the recognized fair value. However, limited research has examined how managerial behavioral effects prior to recognizing fair value (Chen et al., 2013, Green, 2015). Motivated reasoning theory contends that individuals will perceive information in a manner that will benefit their desired outcome (Kunda 1990). Thus, managers are likely to view a fair value that results in gains as a valid representation of the true underlying value. Because of the resulting unrealized gains, managers will be motivated to base Level 3 fair value selling decisions at the fair valuation amount (Green, 2015). When examining manager’s likelihood to sell a Level 3 fair value asset or liability, prospect theory (Kahneman and Tversky, 1979) suggests that only unrealized gain from the increase of the recognized fair value will motivate managers to be risk averse. In order to preserve the unrealized gain, managers will not sell the asset or liability if the market offers a price less than the most recent recognized fair value (Green, 2015). 2- Research hypotheses Based on theoretical foundations and research background, the research hypotheses can be expressed as follows: H1: The conservative level used in the assessment of fair value affects the decision to sell investment at the 3 level of fair value. H2: The level of historical volatility of fair value affects the decision to sell investment at the 3 level of fair value. H3: The interaction of the level of conservatism and the level of historical volatility of fair value, affects the decisio to sell investment at the 3 level of fair value. 3- Methods This research in terms of purpose is a fundamental research, in terms of method is quasi-empirical and in the point of data collection is survey. In this research, to test the research hypotheses, a questionnaire based on the scenario was used. This questionnaire is based on Green (2015). The statistical population consists of all active financial analysts in investment companies and stock exchange brokers and the statistical sample of the study was determined using the sample size tables of Cohen et al. (2000) of 268 people. Multivariate analysis of variance (MANOVA) and univariate analysis of variance (ANOVA) were used to analyze the data and test hypotheses. 4- Results The results of this study showed that conservatism and its interaction with the fair value volatility have a significant effect on the investment selling decisions based on fair value. However, the fair value volatility has no significant effect on these decisions. The other results showed that financial analysts' demographic characteristics do not have a significant effect on investment decision-making. Overall, the results of the research showed that the directors' discretions in fair value accounting affects investment selling decisions. 5- Discussion and conclusion Findings of the research indicate that with the increase in the level of conservatism used in the assessment of fair value, managers' willingness to sell investments increases. This result is consistent with the motivated reasoning and the prospect theory. The results of this study are consistent with the results of Green (2015). In addition, the results of the research showed that the historical volatility of fair value does not affect the decision of investment sales. This result is not consistent with agency theory and prospect theory, but is consistent with the results of Green (2015). The sensitivity analysis of this result suggests that, the increase in the fair value volatility, the asking sales price and the probability of sales below the current fair value has not increased and did not reduce the lowest acceptable price. Keywords: Manager Discretion, Conservatism, Fair Value Volatility, Investment Selling Decisions.
Journal of Accounting Advances, (2020) 12(1): 1-27 DOI: 10.22099/JAA.2021.40327.2124
Journal of Accounting Advances (JAA) Journal homepage: www.jaa.shirazu.ac.ir/?lang=en
The effect of Earnings Co-movement on Quarterly Earnings Response Coefficient Narges Hamidian1
1. Assistant Professor, Department of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan
ARTICLE INF
ABSTRACT
Received: 2021-04-12 Accepted: 2021-06-22
Prior literature shows that a firm’s earnings tend to move with other firms in the same industry. This concept is called co-movement. So investors will be able to form an expectation of a firm’s earnings from the industry. Given that the reported earnings do reflect the flow of information to the market, the purpose of this study is investigating the effect of earnings co-movement on quarterly earnings response coefficient. The sample of this study consists of 134 listed companies in Tehran Stock Exchange during the period 2008 to 2019. The results of the first hypothesis showed that the response coefficients to quarterly earnings announcement have a positive and significant relationship with the buy and hold returns in the three-day earnings announcement window, and earnings co-movement weakens this relationship. Also, the results of testing the second and third hypotheses showed that when there is good news, earnings co-movement weakens earnings response coefficient, but under bad news, earnings co-movement has no effect on earnings response coefficient.
* Corresponding author: Narges Hamidian Assistant Professor, Department of Accounting, Faculty of Administrative Sciences and Economics, University of Isfahan
Email: n.hamidian@ase.ui.ac.ir
1- Introduction Prior literature shows that firms’ earnings tend to co-move together, so investors will be able to form an expectation of a firm’s earnings from the market (Brown and Ball, 1967). This concept is called co-movement. Given that there is a significant relationship between a firm’s earnings and the earnings of other firms in the market, and the reported earnings do reflect the flow of information to the market, the question is whether this relationship has an effect on earnings informativeness? There are two different views about how earnings co-movement impacts earnings response coefficient (earnings informativeness). First, some studies imply the higher the degree of earnings co-movement of a firm with other firms in same industry, the less informative that firm’s earnings release will be. In other words, investors will be able to predict a firm’s earnings by using similar firms in the same industry and so there will be less uncertainty about that firm’s earnings (see, e.g. Fischer and Verrecchia, 2000; Jackson et al, 2020). Second, some other papers (such as Heinle and Verrecchia, 2016 and Jackson et al., 2017) show that the more the earnings of a firm co-move with the industry and market, the less likely it is that the firm will issue a biased earnings report. So, the earnings will be more informative to investors. Therefore, this study attempts to investigate the effect of earnings co-movement on quarterly earnings response coefficient. Also, because of the behavioral biases of investors in reaction to good and bad news, the effect of earnings co-movement on quarterly earnings response coefficient with considering good and bad news has also been investigated.
2- Hypothesis According to the literature, the research hypotheses include:
Earnings co-movement weakens response coefficient to quarterly earnings announcement. Under good news, earnings co-movement weakens response coefficient to quarterly earnings announcement. Under bad news, earnings co-movement strengthens the response coefficient to quarterly earnings announcement.
3- Methods In this study, in order to calculate the variables and test the hypotheses, required data has been collected from the annual and quarterly financial statements and its footnotes of listed companies in the Tehran Stock Exchange and the existing databases including “Rahavard Novin” and “Codal”. The sample of this study consists of 134 listed companies in Tehran Stock Exchange during 2008 to 2019. To test this hypotheses, the period of 8 years (2012 to 2019) and panel data methods have been used.
4- Results The results of investigating the first hypothesis showed that the response coefficients to quarterly earnings announcement have a positive and significant relationship with the buy and hold returns in the three-day earnings announcement window, and earnings co-movement weakens this relationship. Also, the results of testing the second and third hypotheses showed that when there is good news, earnings co-movement weakens earnings response coefficient, but under bad news, earnings co-movement has no effect on earnings response coefficient.
5- Discussion and Conclusion In this paper we investigated the informativeness of a firm’s earnings in the presence of information about other firms’ earnings (i.e., earnings co-movement). Some literatures show the greater the degree of co-movement, the less relevant earnings become as investors do not need to rely on the information signal from the firm because they can predict earnings from alternative sources in the same industry. On the other hand, some studies imply the greater the degree of co-movements, the less opportunity managers have to bias the earnings signal which will lead to the earnings becoming more reliable and more informative. The results of investigating the first hypothesis showed that the response coefficients to quarterly earnings announcement have a positive and significant relationship with the buy and hold returns and when earnings co-movement is considered, the quarterly earnings response coefficient decreases. This means that when earnings’ firms move with other firms in the same industry, investors can get information from other firms in the industry and better predict the earnings’ firm. So, earnings announcement will contain less unexpected information. As a result, earnings response coefficient decreases. This result is consistent with Jackson et al., (2020). The results of testing the second hypothesis indicates that when there is good news, earnings co-movement weakens earnings response coefficient. This implies that investors pay more attention to the good news of the industry and react less to the earnings when good news is published by the firm. But the results of testing the third hypothesis showed under bad news, earnings co-movement has no effect on earnings response coefficient. This lack of relationship may be due to the fact that investors do not pay much attention to the bad news of the industry. For future studies, we suggest to analyze the relationship between co-movement and other variables such as comparability of financial statements, earnings quality, earnings management, fraud, etc. The results of this research can also be done separately by industry to determine in which industries there is more co-movement.
Introduction Empirical evidence suggests the existence of a glass ceiling in the accounting profession. Glass ceiling beliefs in women have important effects on career outcomes such as job satisfaction, organizational commitment, and turnover intentions. That is, to the extent that women believe that there is a glass ceiling, their commitment to the workplace diminishes and they lose their motivation to upgrade their empowerment, which can lead to turnover intentions (Cohen et al., 2020). Glass ceiling beliefs can be so strong that women leave the institution even before they hit the glass ceiling (Lupu, 2012). However, leaving the organization is one of the most costly events that occur in auditing firms and makes the firm incur high tangible and intangible costs (Ganji and Arab Mazar Yazdi, 2021). Accordingly, the aim of this study is to investigate the effect of female auditors’ glass ceiling beliefs on turnover intentions by considering the mediating role of psychological empowerment.
Research Hypotheses In this research, based on the theoretical foundations and previous research, the following hypotheses are presented: H1: Denial has a positive and significant effect on the psychological empowerment of female auditors. H2: Resilience has a positive and significant effect on the psychological empowerment of female auditors. H3: Resignation has a negative and significant effect on the psychological empowerment of female auditors. H4: Acceptance has a negative and significant effect on the psychological empowerment of female auditors. H5: Psychological empowerment of female auditors has a negative and significant effect on tenure intentions. H6: Psychological empowerment mediates the relationship between denial and tenure intentions. H7: Psychological empowerment mediates the relationship between resilience and tenure intentions. H8: Psychological empowerment mediates the relationship between resignation and tenure intentions. H 9: Psychological empowerment mediates the relationship between acceptance and tenure intentions.
Methods A structured questionnaire was used to gather the data for this study. The statistical population of the study consists of female auditors working in member institutions of the Iranian Association of Certified Public Accountants (IACPA). Out of the more than 400 online questionnaires that were sent out, 116 usable responses were returned. The questionnaire contained two sections. Section A consisted of questions to gain demographic information about the respondents, such as organizational position, work experience, marital status, and age. Section B contained questions related to glass ceiling beliefs, psychological empowerment, and tenure intentions. In order to measure the constructs of denial, resilience, resignation, and acceptance, which are considered as components of glass ceiling beliefs, Smith et al.'s Career Path Survey (2012) was used. Tenure intentions were measured by four items that were adapted from Dalton et al. (2014) and Gim and Ramayah (2020). Finally, psychological empowerment was measured using a six-item questionnaire adopted from Spritzer (1995). In this study, hypotheses testing was conducted by using SmartPLS 3. Results This study evaluated the structural model by examining the significance of path coefficients, effect size ( ), coefficient of determination ( ), and variance inflation factor (VIF). It was found H1 was supported, indicating that denial maintains a positive and significant effect on the psychological empowerment of female auditors (b= 0.230, t= 2.219, p= 0.027, 0.042). Resilience also has a significant positive influence on the psychological empowerment of female auditors (b= 0.256, t= 2.337, p= 0.020, 0.070), thus H2 was supported. The results revealed that resignation has no significant effect on the psychological empowerment of female auditors (b= -0.134, t= 1.136, p= 0.256, 0.014), indicating no support for H3. As for H4, in which it was hypothesized that acceptance would have a negative influence on the psychological empowerment of female auditors, the results showed a significant and negative relationship (b = -0.247, t = 2.279, p= 0.023, 0.076). Therefore, H4 was supported. In regards to H5, in which it was hypothesized that psychological empowerment would negatively influence tenure intention, the results also supported this relationship (b= -0.465, t= 5.324, p= 0.000, 0.276). Also, this study examined the mediating effects of psychological empowerment on the relationships between the four elements of the glass ceiling beliefs and turnover intentions. The findings reveal that there is an indirect mediation (full mediation) effect of psychological empowerment on the relationship between denial (b = -0.107, t = 2.065, p= 0.039) and turnover intentions. Therefore, H6 was supported. There is an indirect mediation effect on the relationship between the resilience (b = -0.119, t = 1.964, p= 0.050) and turnover intentions, thus H7 was supported. The results of testing the eighth and ninth hypotheses indicate that constructs of resignation (b = 0.062, t = 1.189, p= 0.235) and acceptance (b = 0.115, t = 1.757, p= 0.080) due to psychological empowerment do not have a significant effect on turnover intentions. Thus, H8 and H9 were not supported.
Discussion and Conclusion The aim of the present study was to investigate the effect of female auditors' glass ceiling beliefs on turnover intentions by considering the mediating variable role of psychological empowerment. In order to achieve this goal, nine hypotheses were proposed. The results of testing the hypotheses indicate the positive and significant effect of denial and resilience and the negative and significant effect of acceptance on the psychological empowerment of female auditors. The results also show that the constructs of denial and resilience through the construct of psychological empowerment have an effect on the turnover intentions, but the indirect effect of resignation and acceptance on the turnover intentions is not significant. The results of this study indicate that part of the higher tendency of female auditors to leave auditing firms than male auditors can be attributed to the beliefs of the glass ceiling. The results of this study show that it is important to pay attention to the beliefs of glass ceiling and create solutions to reduce these beliefs in order to optimally manage human resources.
Introduction Value relevance is studied in order to observe the role of accounting information in explaining the return on securities. Accounting information plays an important role when evaluating the future investors of companies in their investment decisions. In accounting studies, the statistical relationship between accounting information and stock prices is used to assess the degree of value relevance of accounting information to shareholders. Value relevance can be considered as the ability of one or more accounting figures to explain changes in returns and prices. Factors affecting the value of accounting information. One of these factors is the accounting comparability. Comparability is one of the quality-enhancing features of financial reporting that enables users to identify similarities and differences between a set of economic phenomena. The accounting comparability helps users of financial statements to better understand and evaluate the economic performance of a company compared to their peers. Accounting information enables investors to make informed trading decisions and therefore be included in stock prices. However, the usefulness of accounting information for investors depends entirely on the extent to which the information can be modeled on similar companies. The Accounting Standards Board believes that comparability can increase the relevance of accounting information and facilitate investors' evaluation of alternative investment opportunities. More comparability enriches a company's information environment by facilitating benchmarking and giving investors access to a wider range of industry and market information. This means that increasing the supply of information from comparable companies leads to a richer information environment and makes the financial statements of the parent company more informative for capital market participants. Increases the comparability of the quality of information provided in financial statements. Previous studies have shown that comparability improves the accuracy of financial information and makes it easier for market participants to evaluate fairly reported financial statements based on information from similar companies and reduce uncertainty about their accuracy. Ability to compare the cost of collecting and processing company-specific information. Because comparability reduces the cost of collecting and processing investor information, enables accurate and effective evaluation of financial information, increases the value relevance of accounting information. Also, when there is a financial reporting opacity and a Internal control weakness, the effect of accounting comparability on the value relevance of accounting information is reduced. In the absence of complete transparency in financial reporting, managers are given the opportunity to hide negative information within the company in order to maintain their job and professional reputation. When a company's information environment is opaque, the benefits of comparability of financial statements diminish because investors cannot make a reliable estimate of the numbers reported. Weak internal control weaknesses also cause investors to revise their assessments of the quality and accuracy of existing accounting information. Investors react negatively to the disclosure of internal control deficiencies. Accordingly, ineffective internal financial reporting controls reduce investors' confidence in financial information. Therefore, when internal controls are weak, the advantages of comparability of financial statements are reduced. The purpose of this study is to investigate the accounting comparability on value relevance of earning and book value due to the role of financial reporting opacity and internal control weakness. Research Hypothesis: Hypothesis 1: The accounting comparability has a positive effect on the value relevance of book value per share. Hypothesis 2: The accounting comparability has a positive effect on the value relevance of earnings per share. Hypothesis 3: Financial reporting opacity reduces the effect of accounting comparability on the value relevance of book value per share. Hypothesis 4: Financial reporting opacity reduces the effect of accounting comparability on the value relevance of earnings per share. Hypothesis 5: Internal control weakness reduces the effect of accounting comparability on the value relevance of book value per share. Hypothesis 6: Internal control weakness reduces the effect of accounting comparability on the value relevance of earnings per share. Methods: The statistical the population of this study are all companies listed in Tehran Stock Market, in which 102 companies in the period 2013 to 2020 have been selected by systematic elimination method.For data analysis and hypothesis testing, multivariate regression model based on compound data is used Result: The results of estimating the research model indicate that the accounting comparability has a positive and significant effect on the value relevance of book value and earnings per share. The findings also showed that when the opacity in financial reporting is high, the effect of accounting comparability on the value relevance of book value and earnings per share decreases. In addition, when there is a weakness in internal controls, the accounting comparability does not have a significant effect on the value relevance of book value and earnings per share. Discussion and Conclusion: In general, the findings of this study are consistent with the claim of the Financial Accounting Standards Board that the accounting comparability increases the usefulness of accounting information decision and allows investors to better evaluate investment opportunities.
The purpose of this research is to investigate the effect of different stages of the firm life cycle on the quality of financial reporting. To measure the quality of financial reporting, the quality of matching (simultaneous correlation between income and expenses) and the probability of misstatement financial reporting have been used. The statistical the population of this study are all companies listed in Tehran Stock Market, in which 101 companies in the period 2012 to 2022 have been selected by systematic elimination method. For data analysis and hypothesis testing, multivariate regression model based on compound data and probit regression is used. The results of the hypotheses test showed that the quality of the match in the maturity stage is higher than the introduction and growth stage, but the decline stage does not affect the quality of the match. In addition, the results showed that in the introduction stage, the probability of misstatement financial reporting is higher than in the maturity stage. Finally, the findings showed that in the growth and decline stage, the probability of incorrect financial reporting is not higher than in the maturity stage. Overall, the findings of this study increase researchers' understanding of the role of life cycle stages in creating variation in financial reporting quality.
Costs are the main driver of company profitability and therefore company value. Therefore, it is important to understand how cost asymmetry affects firm value, since maximizing firm value is considered the primary objective of the firm. During a sales downturn, holding stagnant resources reduces the present value of sales and increases the opportunity cost of holding unused resources, thereby reducing the firm's profitability and negatively affecting firm value. Firms with higher cost stickiness will have lower profits because cost stickiness causes less inventory adjustment when sales decline. This further reduction in profit when activity levels decrease increases the variability of the profit distribution, resulting in lower profit forecasts. Firms with stickier costs have less analyst coverage, and investors rely less on the realized earnings of such firms due to their lower predictive power. Cost stickiness has been shown to increase credit risk. This increase in credit risk leads to an increase in costs and a decrease in profit, which leads to a decrease in the value of the company. Two currents that increase the intensity of cost stickiness are resource adjustment costs and agency problems. When the demand decreases, the manager can adjust the company's resources according to the changes in the demand level, but this creates adjustment costs, such as the adjustment costs related to labor and equipment. In fact, companies are forced to bear adjustment costs in order to set aside resources and replace the same resources if the demand returns to the original situation. Adjustment costs include such things as compensation for laid-off employees and the costs of searching and training new employees. The authority of the management to determine the level of resources, when the demand decreases, is one of the factors of creating the stickiness of the costs related to these resources. The cost of resource adjustment affects the degree of cost stickiness. The agency problem occurs due to the mismatch of interests between principals (shareholders) and agents (managers). One consequence of the agency problem is that managers who engage in empire-building activities over represent the firm by retaining unused resources in order to gain base, power, compensation, and prestige. For example, overinvestment in labor (over-hiring or under-firing) can result from managers' desire to engage in empire-building activities while retaining low-performing projects. According to previous literature on agency theory, unused resources are conserved because managers obtain monetary and non-monetary benefits from managing large and complex organizations and try to avoid difficult and time-consuming decisions about discarding unused resources. Therefore, companies that have a specific agency problem have more opportunities to sell costs in operational costs such as administrative costs, which lead to cost stickiness and intensify the effect of it. Cost stickiness is one of the factors affecting the value of the firm, which can be caused by resource adjustment costs or agency problems, and this was the main motivation of this study.
Hypotheses
According to the theoretical foundations and objectives of the research, the hypotheses of the research are as follows: H1: Cost stickiness has a negative effect on firm value. H2: The resource adjustment cost increases the intensity of the cost stickiness effect on the firm's value. H3: Agency problems increase the intensity of cost stickiness effect on firm value.
Method
The statistical population of this study are all companies listed in Tehran Stock Market, in which 102 companies in the period 2013 to 2022 have been selected by systematic elimination method.For data analysis and hypothesis testing, multivariate regression model based on compound data is used.
Result
The research results showed that cost stickiness has a negative effect on firm value. Also, the findings showed that when the resource adjustment cost is high, the effect of cost stickiness on the value of the firm increases. In addition, agency problems do not affect the relationship between costs and firm value.
Discussion and Conclusion
This study, therefore, provides insight and understanding into how managers’ deliberate resource adjustment decisions affect overall financial health and firm value. Perhaps managers need to be more transparent about their resource adjustment decisions, so that investors can incorporate both resource adjustment costs and managerial expectations of future demand, when doing risk assessments related to their investment decisions.
Accounting earnings is an appropriate measure for performance evaluation, stock valuation, forecasting and evaluation of expected returns, as well as predicting the company's future performance. Therefore, the announcement of earnings is one of the criteria used to evaluate the reaction of investors to the announced earnings. Like the announcement of earnings, the timing of the earnings announcement also affects the price and returns. Through the timing of the earnings announcement, companies have the possibility to influence the investors' reaction to the reported information, and the market's reaction to the earnings announcement is affected by the time of issuance of the reports. The results of the previous literature show that market reaction to the earnings announcement is influenced by the time of declaring news and reports. The results of these studies show that the announcement of delayed earnings results in negative market reaction, and investors discount this information. This issue can be caused by the reduction of information content of earnings or the possibility of earnings manipulation by managers. Considering the effect of the timing of earnings announcement on the market reaction and also the existence of various motivations for earnings manipulation, it seems necessary to investigate the effect of the timing of the earnings announcement on stock returns and the effect of earnings manipulation on this relationship. Therefore, the purpose of this study is to investigate the effect of the delay in announcing quarterly earnings on abnormal stock returns by considering the moderating role of earnings manipulation.
Hypothesis
According to the literature, the research hypotheses include: 1. The delay of quarterly earnings announcement has a negative effect on abnormal returns at the time of earnings announcement.
Earnings manipulation exacerbates the negative impact of late quarterly earnings announcements on abnormal returns at the time of earnings announcements.
Methods
In this study, to calculate the variables and test the hypotheses, required data has been collected from the annual and quarterly financial statements and its footnotes of listed companies in the Tehran Stock Exchange and the existing databases including “Rahavard Novin” and “Codal”. The sample of this study consists of 126 listed companies in Tehran Stock Exchange during 2012 to 2022. To test hypotheses OLS regression and panel data methods have been used.
Results
The result of the first hypothesis test showed that the delay of quarterly earnings announcement has a negative and significant effect on the abnormal return. Also, according to the second hypothesis, earnings manipulation based on the adjusted model of Beneish (1999) aggravates this negative effect. That is, the delayed earnings announcement in the investors' view can involve earnings manipulation and as a result, the negative reaction to the delay in quarterly earnings announcements will intensify. However, earnings manipulation based on the model of Kothari et al. (2005) did not have a significant effect on the negative market reaction to the delayed earnings announcement.
Discussion and Conclusion
According to the accounting literature, the delayed earnings announcement is accompanied by negative market reaction and investors discount this information. Chen et al. (2021) believe that this negative reaction can be caused by a reduction in the information content of delayed earnings or the possibility of earnings manipulation by managers. Therefore, in this study, the effect of the delay of quarterly earnings announcement on abnormal stock returns by considering the moderating role of earnings manipulation was investigated.The results of the first hypothesis test showed that the coefficient of delayed earnings announcement at the 95% confidence level has a negative and significant effect on the accumulated abnormal return, which shows, the longer the quarterly earnings announcement is delayed, the lower the cumulative abnormal return in the earnings announcement window; then the first hypothesis is not rejected. In other words, the capital market reacts negatively to the delayed earnings announcement. In the second hypothesis, the effect of earnings manipulation on the negative relationship between the delayed earnings announcement and cumulative abnormal return was investigated. The results of the test of this hypothesis showed that earnings manipulation based on the model of Kothari et al. (2005) has no significant effect on the negative relationship between the delayed earnings announcement and abnormal returns, and the second hypothesis is rejected based on this criterion. This result is consistent with Chen et al. (2021). However, according to the earnings manipulation criterion based on the adjusted Beneish model (1999), the coefficient of the interactive variable RLaq × EMB is negative and significant at the 95% confidence level. Considering the negativity of the coefficient of the interactive variable and also the negative effect of the delayed earnings announcement on the accumulated abnormal return (first hypothesis), it can be said that the earnings manipulation based on the adjusted model of Beneish (1999), aggravates the negative effect of the delayed earnings announcement on the abnormal return, so the second hypothesis is not rejected. This shows that the delayed earnings announcement can contain information about the possibility of earnings manipulation, and investors react negatively to this announcement of earnings.
1- Introduction Due to the separation of ownership from management and conflict of interests, asymmetry of information between managers and owners, debt contracts and managers' rewards, there is a probability of distortion and manipulation of earnings by management. In this regard, the information environment of the firms plays a central role in the investors' reaction to the financial reports. There are various sources of information to obtain information, include reports published by the firm or information published by peer firms in the same industry. The ability of managers to manipulate earnings or not, depends on the amount of information that can be obtained from other sources of information such as financial statements of other firms. The intra-industry information transfer and the earnings co-movement can affect the involvement of managers with earnings manipulation activities. When there is earnings co-movement, capital market’s members can obtain information from the earnings of peer firms about the real and correct earnings of the firm, and as a result, they can better identify bias in financial information and reports. The knowledge of the capital market participants about the true earnings of the firm, the expected benefits of earnings manipulation are reduced. Based on this, the aim of this study is to investigate the effect of earnings co-movement on the probability of earnings manipulation and also to investigate this relationship under the conditions of product market competition. 2- Hypothesis According to the literature, the research hypotheses include:
In firms with higher earnings co-movement, the probability of earnings manipulation will be less. In firms with low product market competition, compared to high competition, the relationship between earnings co-movement and the probability of earnings manipulation will be stronger.
3- Methods In this study, in order to calculate the variables and test the hypotheses, required data has been collected from the annual and quarterly financial statements and its footnotes of listed companies in the Tehran Stock Exchange and the existing databases including “Rahavard Novin” and “Codal”. The sample of this study consists of 134 listed companies in Tehran Stock Exchange during 2009 to 2020. To test hypotheses, logit regression and panel data methods have been used. 4- Results The results of the first hypothesis test showed that earnings co-movement has a negative and significant effect on the probability of earnings manipulation. That is, in firm with higher earnings co-movement, the probability of earnings manipulation is less. The results of testing the second hypothesis also showed that in firms with low product market competition, there is a negative relationship between earnings co-movement and the probability of earnings manipulation, but there is no significant relationship in firms with high product market competition. Therefore, in firms with low competition, compared to high competition, the relationship between earnings co-movement and the probability of earnings manipulation is stronger. Based on the sensitivity analysis test, the relationship between earnings co-movement and probability of earnings manipulation is stronger in companies with old age, compared to young ones. 5- Discussion and Conclusion According to the accounting literature, the intra-industry information transfer and the earnings co-movement can affect the level of involvement of managers with earnings manipulation activities. Based on this, in the current study, the impact of earnings co-movement on the probability of earnings manipulation was investigated, as well as the investigation of this relationship under the conditions of product market competition. According to the first hypothesis, it was expected that the probability of earnings manipulation would be lower in firms with higher earnings co-movement. The results of the test of this hypothesis showed that the coefficient of earnings co-movement variable is significant and negative at the confidence level of 95%, and the first hypothesis of the research is not rejected. This means that when the firm’s earnings moves with the earnings of other companies in the industry and this co-movement is more, investors can estimate the expected profit of the firms based on the earning’s’ information of other firms in the industry. In this situation, managers will be less able to manipulate earnings, as a result, the probability of earnings manipulation will decrease. In the second hypothesis, the relationship between earnings co-movement and the probability of earnings manipulation in high and low competitive environment was investigated. When product market competition is higher, competition acts as a disciplinary mechanism and limits the biased behavior of managers. Therefore, it was expected that in firms with low product market competition, the relationship between earnings co-movement and the probability of earnings manipulation will be stronger than in high competition. The results showed that in firms with high product market competition, earnings co-movement has no significant effect on the probability of earnings manipulation, but in firms with low product market competition, earnings co-movement has a negative and significant effect on the probability of earnings manipulation. That is, the high competition in the product market is a deterrent and a limiting factor for managers' biased behavior. Based on accounting literature, managers' motivations and their bonus contracts are different based on the firm’ age. Hence, the relationship between earnings co-movement and the probability of earnings manipulation was also investigated by considering the age of firms. The results showed that in older firms, earnings co-movement has a negative and significant effect on the probability of earnings manipulation, but no significant effect was observed in younger firms. This may indicate that old firms are the focus of attention of capital market activists and shareholders. Therefore, in old companies, the earnings co-movement reduces the probability of biased activities of managers and earnings manipulation. Keywords: Earnings Co-movement, Earnings Manipulation, Intra-industry Information Transfer, Product Market Competition.
The purpose of this research was to analyze the impact of investors' sentiments on the volatility of portfolio returns of companies with difficult pricing characteristics compared to their opposite companies. Information asymmetry leads to disagreements about pricing. Companies with difficult pricing are companies that, is not possible to determine their price correctly. Investors are expected to be more involved in the emotional climate than the shares of these companies For this purpose, hypotheses were designed. A sample of 173 companies was selected from the TSE in 2011 and 2023 and the hypotheses were investigated through the formation of a stock portfolio with monthly data. Three criteria were used to determine companies with difficult pricing characteristics, including size, book-to-market ratio, and illiquidity. The findings showed that investors' sentiments had an asymmetric effect on the volatility of portfolio returns of companies with difficult pricing characteristics and conflicting companies. So that the measures of the ratio of book value to market value and illiquidity show the effect of emotions on the portfolio of companies with difficult pricing more than the opposite companies, while the size measure shows this effect for the portfolio of companies with opposite pricing more than the companies with difficult pricing. . Therefore, it can be concluded that at least for companies with high illiquidity and high book value to market ratio, investors' emotions have a double effect on yield volatility, and investors should be cautious and take into account the emotional atmosphere in the trading of such stocks.
Errors occur at all levels of the audit team, and the management of these errors by the auditors who commit them plays an important role in improving the audit quality. The purpose of the present study is to investigate the effect of personal and organizational constructs on the predisposition of independent auditors toward handling self-made errors, considering the role of the moderating variable of their perception of audit firm’s organizational error management climate. The statistical population of this research includes auditors working in Audit Organization or audit firms that are members of the Iranian Association of Certified Public Accountants. The required data has been collected using a survey method and through a standard questionnaire from 178 auditors in 2023. In this research, structural equation modeling by partial least squares method has been used for data analysis. The results of the hypothesis test indicate that the constructs of resilience, self-efficacy, independence commitment and auditors’ perception of audit firm’s organizational error management climate have a positive and significant effect on the predisposition of independent auditors toward handling self-made errors. In addition to, the construct of auditors’ perception of audit firm’s error management climate moderates the effect of resilience and self-efficacy on predisposition of independent auditors toward handling self-made errors. The results of this research show that by increasing the resilience and self-efficacy of independent auditors and improving the organizational error management climate in audit firms, it is possible to provide the grounds for improving audit quality.
International Journal of Applied Business and Economic Research (09727302)13(2)pp. 955-970
In this study, the impact Profitability was investigated on Stock Returns based on the price, return and differenced model. Profitability was considered as independent variable and firm size and life cycle as control variables. The sample was included 60 members of the Tehran Stock Exchange during the period of 2005 to 2012. Library study was used for collecting information. Quantitative methods were utilized including statistical analysis and multiple regression analysis. Also STATA version 11 and Excel software were used for the analysis of data and results. The results suggest that all models profitability impact on stock returns and profitability factor should be addressed for earning higher returns.
Shirzad-Aski H., Yazdi, M., Mohebbi A., Rafiee M., Soleimani-delfan, A., Tabarraei A., Ghaemi, E.A., Asadi, P., Abbasi jondani, J., Rahrovi dastjerdi, A., Taymouri, S., Yazdkhasti, F., Saadatseresht, M., Foroghi, D., Khodarahmi, G., Abedi, A., Varshosaz m., M., Kiani, G.H., Jalali, H., Zaker, H., Sadeghi-aliabadi, H., Dinari, M.
