Naser Izadinia, Ph.D. ,
Associate Professor
Department Of AccountingFaculty Of Administrative Sciences And Economics
Address
University of Isfahan
Azadi square
Isfahan, Iran
Postal Code : 8174673441
Research Output
Articles
2021
Publication Date: 2021/04/21
پیشرفت های حسابداری (20089988)(1)pp. 379-409
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.
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.
2018
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 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.
2025
Publication Date: 2025
Heritage and Sustainable Development (27120554)7(2)pp. 1041-1054
This study explores the impact of cost stickiness and its signaling effect on the accuracy of earnings per share (EPS) forecasts in the capital markets of developing countries, with a focus on Iraq and Jordan. Cost stickiness, defined as the asymmetric response of costs to revenue fluctuations, particularly their slower reduction during sales declines, challenges traditional forecasting models that assume cost symmetry. Drawing on panel data from 30 publicly listed firms between 2014 and 2023, the study tests six regression-based hypotheses. The results indicate that higher levels of total and operational cost stickiness significantly impair EPS forecast accuracy. In Iraq, operational and wage-related stickiness exert the strongest effects, while in Jordan, service and depreciation costs play a more prominent role. These findings are interpreted through agency theory, signaling, and information asymmetry, emphasizing how weaker institutional quality and disclosure, as in Iraq, intensify the adverse effects. The study contributes to the cost behavior literature and offers practical insights for analysts, regulators, and managers in emerging markets. © The Author 2025. Published by ARDA. This work is licensed under a Creative Commons Attribution License (https://creativecommons.org/licenses/by/4.0/) that allows others to share and adapt the material for any purpose (even commercially), in any medium with an acknowledgement of the work's authorship and initial publication in this journal.