In the institutional theory framework, organizational culture is recognized as a significant factor influencing organizational behavior, which can affect the stock price crash risk. The primary objective of this research is to examine the impact of organizational culture on the stock price crash risk. Data from 124 companies listed on the Tehran Stock Exchange over ten years from 2012 to 2021 were selected, and the hypotheses were tested using multiple linear regression and panel data models. Organizational culture was assessed through four quadrants (control-oriented, Creation-oriented, collaboration-oriented, and competition-oriented) utilizing a text analysis approach and software tools including Adobe Acrobat, Microsoft Edge, and OCR (using Python programming language). According to the hypotheses, the findings indicated that organizational culture, as represented by the control-oriented, creativity-oriented, collaboration-oriented, and competition-oriented quadrants, does not influence the stock price crash risk. However, at a 90% confidence level, collaboration-oriented and creativity-oriented cultures positively affect the stock price crash risk. Contrary to the institutional theory perspective, the results revealed that in the economic environment of Iran, organizational culture does not significantly influence the opportunistic behavior of company managers, preventing any changes in the accumulation or disclosure of bad news by them. Measuring organizational culture through a text analysis approach in the framework of the four cultural quadrants and examining its impact on the stock price crash risk contributes to a better understanding of the relationship between organizational culture and stock price crash risk. Introduction Stock price crash risk refers to the probability of a severe and unexpected decrease in stock value, which leads to a reduction in shareholder wealth. A group of researchers suggests that some managers engage in behaviors such as withholding bad news related to the company due to motives like wealth preservation, bonus contracts, tax evasion, job security, and ultimately maximizing their benefits. In other words, managers tend to strategically withhold negative news about the organization and loss-making projects during such times. This can lead to the accumulation of bad news regarding the fundamental status and performance of the organization. In these circumstances, the delay in releasing bad news results in excessive optimism among investors regarding the company's future growth. On the other hand, there is always a certain threshold for the accumulation of negative news; when the accumulated news reaches this level, it suddenly floods the market, prompting a revision of investors' previous beliefs and ultimately resulting in a significant drop in the company's stock price in the capital market. According to institutional theory, environmental factors such as political, social, and cultural pressures influence organizational behavior. This theory describes the social interactions within organizations and demonstrates how these pressures become institutionalized and manifest as accepted rules and common behaviors. Within the framework of institutional theory, the present research aims to examine the impact of organizational culture as an environmental characteristic on the stock price crash risk in the Iranian economic environment. Understanding and awareness of the factors influencing stock price crash risk are essential for investor decision-making and risk management. There are three main reasons for understanding the determinants of stock price crash risk. First, the crash risk cannot be eliminated through portfolio strategies; second, high stock price crash risk leads to undesirable consequences, such as high audit costs for clients and a slow adjustment of leverage; third, significant stock price crash risk negatively impacts investor wealth and the stability of the financial market. Most studies concerning the factors influencing stock price crash risk into two categories. The first category examines the positive factors affecting the risk of stock price decline, while the second category focuses on the negative factors influencing this risk. Furthermore, a growing body of literature has explored the determinants of stock price crash risk from the perspective of social norms, such as national culture. Accordingly, the main question that arises is: What impact does organizational culture have on the stock price crash risk? To answer this primary research question, the four quadrants of organizational culture—control-oriented, competition-oriented, collaboration-oriented, and Creation-oriented quadrants—are introduced within the framework of competitive values proposed by Quinn and Rohrbaugh (1981). This is assessed using a text analysis approach, following Behndari et al. (2022), to obtain the average cumulative scores for each cultural quadrant (both overall and by industry). Subsequently, the stock price crash risk is calculated following Andreu et al. (2021) using two metrics: the negative skewness of stock returns and low upward volatility. Finally, the relationship between the cultural quadrants and the stock price crash risk is tested through regression models. Methods & Material This research is classified as empirical research and falls under applied research in terms of purpose. The study is descriptive-correlational and retrospective, as it uses historical data to test the hypotheses. For this research, financial data from companies were collected and analyzed using panel data analysis and multivariate regression methods. The tests include descriptive statistics of the variables, and to determine the degree of relationship between the research variables, multivariate regression coefficients were employed. The sample consists of 104 companies listed on the Tehran Stock Exchange during the period from 2012 to 2021, selected based on specific screening criteria, which are as follows: a) the fiscal year of the selected companies must end in March of each year; b) they should not have trading pauses exceeding three months; c) the companies' information must be available for the specified year; d) there should be no changes in the fiscal year during the research period; e) they must be manufacturing companies; f) they should not have accumulated losses during the research period; and g) their industries must consist of at least four companies. Findings The first to fourth hypotheses of the research claim that organizational culture (control-oriented, competition-oriented, creativity-oriented, and collaboration-oriented) influences the risk of stock price decline within the framework of institutional theory. The results of the hypothesis tests using the first measure of stock price crash risk indicated that in all four quadrants of organizational culture, the significance level of the independent variable is greater than 5 percent when using the negative skewness of stock returns (stock price crash risk). Therefore, there is no significant relationship between organizational culture and the stock price crash risk at the 95 percent level. In other words, none of the quadrants of organizational culture affect the stock price crash risk based on this measure. Consequently, all research hypotheses are rejected using the first measure of stock price crash risk. However, at a 90 percent confidence level, collaboration-oriented and creativity-oriented cultures positively influence the stock price crash risk. The results of the hypothesis tests using the second measure of stock price crash risk (low upward volatility) indicated that in all four quadrants of organizational culture, the significance level of the independent variable is greater than 5 percent when using the second risk measure. Thus, there is no significant relationship between organizational culture and the stock price crash risk at the 95 percent level. This means that none of the quadrants of organizational culture affect the stock price crash risk based on this measure. Therefore, all research hypotheses are rejected using the second measure of stock price crash risk. Conclusion & Results Considering that the hypotheses were logically sound from a theoretical perspective but did not establish an empirical connection, several points can be made: 1) The existence of various industries can be considered a reason for rejecting the research hypotheses. Since organizational culture can differ significantly from one industry to another, if the hypothesis testing had been conducted by industry, the hypotheses might have been confirmed. 2) Additionally, given that the economic environment in Iran has been in a particular state in recent years due to external conditions, including international sanctions, and that organizational culture is influenced by political and economic conditions, the environmental conditions of Iran's economy can also be a reason for rejecting the research hypotheses. The findings of this research are consistent with the results of studies by Kordestani and Khatami (2016), Moradi and Karami (2019), and Mousavi et al. (2016). This study examined one of the factors influencing the stock price crash risk., namely organizational culture, within the framework of four cultural quadrants. It is suggested that future research should investigate the impact of the country's political and economic conditions on the relationship between organizational culture and the risk of stock price decline. For example, it could be proposed that the research hypotheses be examined and tested before and after the imposition of international sanctions on the country's economy. Furthermore, to enhance the understanding of the impact of organizational culture on the risk of stock price crash risk, future studies should conduct a detailed analysis across different industries to identify the potential effects of organizational culture in each sector. Additionally, conducting similar studies in other countries and comparing the results with those from Iran could contribute to a better understanding of this subject and the relevant literature.
This study examines the gap between investors' and financial managers' views on the presentation of operating cash flows. The method used is three separate surveys conducted through structured questionnaires on random samples of private investors (384 people), financial managers (201 people), and auditors (265 people). Evidence collected from private investors shows that about 85% prefer the direct method for presenting operating cash flows and demand information on “cash receipts from customers” as the most important operating cash flow. This is while less than a third of them believe it is possible to reasonably estimate such information using indirect method disclosures and other financial statements. On the other hand, there is a significant difference in the views of preparers and auditors regarding the possibility of preparing a cash flow statement using the direct method. Most of the auditors in the sample believe it is possible to disclose the operating cash flow section directly, considering cost-benefit considerations, for the company whose financial statements they audit; however, only about 9% of financial managers believe so. These two groups also disagree about the reasons for support. Therefore, from the overall findings, it can be inferred that there is a gap between accountants' practical procedures and investors' expectations; a gap that can undermine the desired quality of financial reporting. This study, by carefully examining the opinions of people related to the cash flow statement from the preparation stage to its use, attempts to expand the existing literature on the cash flow statement throughout its life cycle in the Iranian environment. Introduction Prior research (e.g., Orpurt & Zang, 2009) suggests that the direct method provides more decision-useful information, particularly for forecasting future cash flows. However, accountants still favor the indirect method, raising concerns about the motivations and potential inefficiencies underlying this preference. This study uses the concepts of “insistence” and “pathology” to critically assess the persistence of this accountants’ behavior and, drawing on agency theory and user-oriented financial reporting, seeks to examine the alignment of current practice with the needs and expectations of stakeholders (particularly private investors); the rationale behind this trend and its implications. Accordingly, the study poses several key questions: How do investors utilize the cash flow statement in practice, and what is their preferred method of reporting? Are investors able to reasonably estimate the components of operating cash flows only available under the direct method? The study also explores the perspectives of financial managers and auditors to assess the feasibility and justification for a shift toward the direct method. Research Method In this study, to find the necessary evidence to answer the questions raised, the required data were collected through a survey of target individuals in three communities: private investors, financial managers, and auditors. Given the size of the communities for financial managers of companies (405 companies) and the certified auditors (820 people) and the lack of clarity of the community framework for private investors, using the Morgan table, the sample size for investors will be 384, auditors 265, and financial managers 201. The questionnaires used in the surveys were structured and were distributed and implemented online to increase participation. Findings The findings showed that most investors use the cash flow statement in their economic decision-making, and this use is mainly to assess the liquidity and predict the future cash flows of the company. Supplementary findings showed that while investors consider the cash flow statement to be the most useful part of the financial statements in assessing a company's liquidity; however, this financial statement is in third place in terms of usefulness in predicting future cash flows. In examining the preferences of private investors, evidence shows that about 85% of people prefer the direct method for presenting operating cash flows. They consider "cash receipts from customers" as the most important operating cash flow, and most investors who use the cash flow statement in economic decision-making consider direct disclosure of this item to be very important. This is even though less than one-third of investors believe it is possible to reasonably estimate this item using indirect method disclosures and other financial statements. On the other hand, although the findings of this study show that preparers of financial statements cite management discretion as the most important reason for their opposition to the direct method, auditors have a different view. Auditors state that the most important reason is that the indirect method provides a better relation between the cash flow statement and other financial statements. The results show that this disagreement regarding the possibility of disclosing the operating cash flow section using the direct method also exists between preparers and auditors. Conclusion & Results The set of findings indicates that there is no clear consensus among professionals on the feasibility of implementing the direct method and the reasons for supporting the indirect method. While accounting standards seek to promote transparency and accountability in financial reporting, ignoring user expectations can reduce the effectiveness of the information provided. Insistence on using the indirect method affects the qualitative characteristics of financial reporting. This method reduces reliability (fair presentation) because it is based on the income statement, which is prone to error and does not rely on initial transactions. Also, the characteristic of "relevance" is impaired, because the findings of this study show that the indirect method is severely criticized for not paying attention to the needs of users. As a result, the lack of compliance of practical procedures with user expectations and the decline in the qualitative characteristics of financial reporting can prevent investors from effectively using the cash flow statement in economic decision-making. The findings of this study highlight the need to revise standards and the requirement to use the direct method.
The primary objective of this research is to examine the insurance effect of corporate social responsibility (CSR) on firm performance in the context of the withdrawal from the Joint Comprehensive Plan of Action (JCPOA). In the second phase, this study investigates the effect of insurance on both short- and long-term periods. To this end, a difference-in-differences approach was employed, utilizing data from 105 companies listed on the Tehran Stock Exchange over nine years from 2015 to 2023. The results of this study indicate that the withdrawal from the JCPOA had a significant negative impact on firm performance. Regression results reveal that this negative impact was particularly pronounced in the first four years following the withdrawal and was not significant in the fifth and sixth years. Furthermore, corporate social responsibility not only has a positive effect on firm performance but also acts as an insurance tool against the negative consequences of the withdrawal from the JCPOA. This insurance effect has been confirmed with over 95% confidence in the first to third years following the withdrawal. Therefore, the presence of corporate social responsibility is essential and crucial in both the short and long term. IntroductionExisting research indicates that companies with high social responsibility gain more social capital and suffer less damage during crises. Additionally, empirical evidence has shown that increased trust in these companies can mitigate the negative effects of political shocks and serve an insurance-like role. Based on these principles, this study focuses on social responsibility as a representative of social capital and uses the difference-in-differences method to investigate the insurance-like effects of social responsibility during the withdrawal period from the JCPOA. For this purpose, data from 105 companies over the period from 2015 to 2023 were selected, and the research hypotheses were tested using Stata software.Methods & MaterialIn this applied research, multivariate regression analysis was used to examine the relationships between variables, and the methodology is retrospective. The study is also descriptive-correlational, as it assesses the relationships among several variables. Data needed to test the research hypotheses were collected from various sources, including the Kodal website, Rahvard Navin, and Hamgenin software, the activity reports of the board of directors to the general assembly, and the explanatory notes of the financial statements. The data were then classified using Excel and analyzed using Stata software. The statistical population of the research includes companies listed on the Tehran Stock Exchange between 2015 and 2023, which encompasses 105 companies.FindingThe results of the second hypothesis indicate that the withdrawal from the Joint Comprehensive Plan of Action (JCPOA) has had a significant negative impact on firm performance, while corporate social responsibility (CSR) serves as an insurance effect in mitigating these negative impacts. These findings align with existing literature, suggesting that companies with high social capital are recognized as more trustworthy, and in conditions of low public trust, investors may assign a premium valuation to these firms. According to stakeholder theory, companies that engage in positive two-way relationships with others are likely to suffer less during crises, such as the JCPOA withdrawal, because various stakeholders (including shareholders, employees, and customers) are more inclined to support such firms. Additionally, the results derived from the difference-in-differences approach reveal that the negative impact of the JCPOA withdrawal on firm performance was most pronounced in the first four years following the exit and was not significant in the subsequent years. CSR plays a crucial role and has an insurance effect in reducing the negative consequences of political shocks, such as the withdrawal from the JCPOA, on firm performance. Specifically, the negative effects of the JCPOA withdrawal on firm performance were greater in the first three years, and these negative effects diminished in the fourth year and beyond.Conclusion and ResultsThus, CSR can act as a mitigating factor during various crises, reducing harm and enhancing support for companies. This insurance effect may yield positive outcomes with over 95% confidence from the outset up to the fourth year following the JCPOA withdrawal. Therefore, the presence of CSR is vital for companies in both the short and long term. The results of this research emphasize that corporate social responsibility (CSR) can serve as a strategic tool for mitigating the negative impacts of political shocks, and companies should pay particular attention to this aspect of their activities.
Knowledge of earnings management is essential for users of accounting information due to performance evaluation, profitability forecasting, and determining the true value of the company. The purpose of this research is to provide a model to diagnose accrual-based earnings management and real earnings management through performance evaluation of machine learning methods including decision tree, support vector machine, k-nearest neighbor, deep learning, and combining them with feature selection methods based on relief and principal component analysis. To achieve this goal, 180 companies admitted to the Tehran Stock Exchange were selected as a statistical sample from 2010 to 2021. Also, to test the hypotheses, the criteria of average accuracy and type I and type ΙΙ errors were used. The results show that the performance of accrual-based earnings management forecasting methods based on the relief-based feature selection model is better than the feature selection model based on principal component analysis. This result was confirmed in all prediction methods. However, the results did not show the superiority of the relief-based feature selection model over the principal component analysis-based feature selection model in predicting real earnings management. Also, the findings showed that accrual earnings management can be more accurately predicted than real earnings management. The research results can be of interest to investors, creditors, financial analysts, and auditors. Incorporating machine learning methods can help identify potential earnings management activities. IntroductionEarnings management can be described as the discretion utilized by managers to provide generally accepted accounting principles (GAAP)-based financial reports that can affect the relevance and reliability of the presented accounting information. EM can be performed either (1) through deviations from normal business practices to purposefully manipulate earnings; this is called real earnings management (Roychowdhury, 2006), and it affects cash flow from operating activities; or (b) by manipulating reported earnings through accruals, that is accrual-based earnings management, to achieve a suitable earnings figure. As a corporation's earnings are used by different financial statement users (such as shareholders, creditors, and financial analysts) to gauge its performance, detection of earnings management can be interesting and crucial for them. In this context, this study attempts to present prediction tools that aid in detecting earnings management activities. For this purpose, six machine learning methods have been discussed to predict earnings management.Methods & MaterialA sample of 180 companies listed on the Tehran Stock Exchange during the period 2010-2021 was selected for testing hypotheses. The performance of each machine learning method at predicting accrual-based earnings management and real earnings management was evaluated based on three criteria: type Ι error, type ΙΙ error, and average accurac.FindingThe results show that the performance of accrual-based earnings management forecasting methods based on the relief-based feature selection model is better than the feature selection model based on principal component analysis. This result was confirmed in all prediction methods. However, the results did not show the superiority of the relief-based feature selection model over the principal component analysis-based feature selection model in predicting real earnings management. Also, the findings showed that accrual earnings management can be more accurately predicted than real earnings management.Conclusion & ResultsEarnings management would affect accounting data, in particular, the earnings reported in accounting other than the actual earnings of an enterprise. Therefore, the prediction of earnings management is still an issue of great importance. The purpose of this research is to use machine learning methods such as decision tree, support vector machine, k-nearest neighbor, and deep learning to predict earnings management. Also, this research relies on feature selection to identify the most optimal features for use in the prediction model. Even though the determinants of earnings management have been studied for a long time, the ability of these factors to predict earnings management has received less attention.The results show that the combination of feature selection based on relief with each of the forecasting methods provides a more accurate performance for predicting accruals earnings management than the feature selection based on principal components analysis. However, the results did not show the superiority of the relief-based feature selection model over the principal component analysis-based feature selection model in predicting real earnings management. Also, the findings showed that accrual earnings management can be more accurately predicted than real earnings management. In addition, the results indicated that the most important features for prediction are related to the auditor's features in the first place and then to the features of the company's ownership structure. In other words, investors should pay a lot of attention to the features of the auditor and the ownership structure of companies in predicting earnings management. Based on the obtained results, the hybrid method based on deep learning and relief feature selection has the highest prediction accuracy (89/62) among other hybrid methods for forecasting accruals earnings management, and the hybrid method based on deep learning and principal component analysis feature selection has the highest prediction accuracy (82/65) among other hybrid methods for forecasting real earnings management.The findings of this study can expedite earnings management detection for financial statement users by improving earnings management prediction accuracy. These results may be applied to reduce investment risks and losses and increase investment benefits for investors and creditors if they are better able to predict misleading financial reports due to earnings management. In summary, the results of this study suggest tools to decision makers that help in predicting earnings management with relatively high accuracy.
Product market conditions are an important factor that affects the balance of benefits and costs associated with CEO power. On the one hand, competition in the product market serves as an external mechanism of corporate governance, which can reduce the likelihood of management engaging in opportunistic behavior and enhance the clarity of the company's financial reports. On the other hand, increased costs associated with information disclosure in competitive market conditions, coupled with the need to maintain a competitive edge and individual interests, may incentivize powerful managers to present financial reports that are more complex and less transparent. Therefore, the purpose of this research is to investigate the effect of competition in the product market on the relationship between CEO power and the readability of financial reports. Research hypotheses were tested using data from 105 companies listed on the Tehran Stock Exchange between 2016 and 2022. The results indicate a positive and significant relationship between CEO power and the readability of financial reporting. Furthermore, competition in the product market has a diminishing moderating effect on the relationship between CEO power and the readability of financial reports. Introduction The readability of annual reports is an important tool for communication between companies and various stakeholders, including investors, creditors, and financial analysts. Recent studies have shown that the readability of financial reports is influenced by the power of managers. There is no clear consensus regarding the effect of CEO power on company outcomes. On the one hand, it is assumed that as CEOs' power increases, their ability to pursue personal interests also grows. In this view, managers may use their power to obfuscate financial reports, reducing their readability. This perspective aligns with certain economic research. On the other hand, opponents of this view argue that increased CEO power may enhance the monitoring of the company's processes and financial reporting. Factors such as adherence to laws and regulations, motivation to maintain a positive reputation, and superior management skills may lead powerful managers to adopt better strategies for company operations, thus promoting transparency and safeguarding the interests of all stakeholder groups. Consequently, powerful CEOs may produce more readable financial reports, consistent with findings in organizational research. Furthermore, product market conditions significantly impact the balance of benefits and costs associated with CEO power. On the one hand, competition in the product market acts as an external mechanism of corporate governance, potentially diminishing the likelihood that management will exploit their power for opportunistic behavior, which could enhance the readability of financial reports. On the other hand, high disclosure costs in competitive markets, coupled with the need to maintain a competitive edge and personal interests, may incentivize powerful managers to create financial reports that are more complex and less readable. In light of these considerations, the purpose of this research is to investigate the effect of competition in the product market on the relationship between CEO power and the readability of financial reports. Methods & Material The current research is based on applied results. In terms of its goals, it is analytical, quasi-experimental, and correlational. Regarding the time dimension of the data, it is retrospective and post-event. To achieve the objectives of the research, 105 companies listed on the Tehran Stock Exchange were examined for the period from 2016 to 2022. The power of the CEO was measured using the principal component analysis method, which considered criteria such as CEO duality, the percentage of independent directors on the board, CEO tenure, and CEO ownership percentage. Additionally, the readability of financial reports was assessed using the Fog index, and competition in the product market was measured using the Lerner index. To collect research data, the Rahavard Novin database and reports published on the Codal website were utilized. For data review and analysis, EViews software was employed, and regression analysis with panel data was used to estimate the research models. Findings The results indicate a positive and significant relationship between the CEO's power and the readability of financial reporting. In other words, as the CEO's power increases, the readability level of financial reporting also improves. Additionally, competition in the product market has a diminishing moderating effect on the relationship between CEO power and the readability of financial reporting. Conclusion & Results The results, consistent with organizational theory, show that powerful CEOs positively influence the readability of financial reports by enhancing company performance, motivating the maintenance of their reputation, building a strong personal and professional network for better access to crucial (including private) information, and implementing valuable practices such as superior management techniques and social responsibility initiatives. However, in competitive environments, powerful managers may present more complex and less readable financial reports to prevent competitors from accessing company information and maintaining a competitive advantage, which aligns with the ambiguous management hypothesis. According to this hypothesis, managers' motivations can obscure and conceal information through less transparent disclosures. They may hide information they do not wish to disclose, making it challenging for investors to comprehend financial reporting.
The phenomenon of dividend stickiness has recently attracted significant attention from researchers. However, limited domestic studies are addressing this issue. This study aims to better understand the various aspects of this phenomenon by examining the relationship between managers' overconfidence and dividend stickiness, as well as the effect of firms' catering incentives on this relationship. Utilizing data from 143 firms listed on the Tehran Stock Exchange between 2012 and 2023 (1,716 observations), this research employs a Logit regression approach with the maximum likelihood estimator, controlling for fixed effects of years and industries. The findings confirm the existence of dividend stickiness and reveal a positive and significant relationship between managers' overconfidence and dividend stickiness. Furthermore, the results indicate that an increase in firms' catering incentives weakens this relationship. Robustness tests, which include controls for macroeconomic variables and the impact of the COVID-19 pandemic using the ordered logit model and an alternative measure for the moderating variable, support the main findings and align with the concepts proposed in the Catering theory.Introduction Building upon Lintner's (1956) seminal research on dividend stickiness, various researchers have extensively explored this phenomenon (Lintner, 1956; Brav et al., 2005). Three primary explanations have been proposed to account for this phenomenon. First, dividends serve as a channel for transmitting a firm's private information (Guttman et al., 2010; Baker et al., 2016). Second, firms with stronger regulatory mechanisms or those exposed to greater agency conflicts tend to smooth dividends more (Leary & Michaely, 2011; Javakhadze et al., 2014). Third, investor preference for dividend payments encourages managers to cater to shareholders by providing dividends (Larkin et al., 2017). However, empirical evidence remains limited regarding how much differences in dividend stickiness among firms can be attributed to managerial beliefs (Deshmukh et al., 2013; Wrońska-Bukalska, 2018). Consequently, the present study aims to investigate the dividend stickiness phenomenon in Iranian firms, examine the relationship between managers' overconfidence and dividend stickiness, and assess the impact of catering incentives on the relationship between managers' overconfidence and dividend stickiness.Methods & MaterialData collection for this study was conducted using the Rahvard Novin database, the Codal website, and the Central Bank of Iran. Data analysis was performed using Stata software. The research models were estimated via Logit regression with the maximum likelihood estimator, controlling for fixed effects of years and industries. To address potential heteroscedasticity and correlation among error terms, cluster-robust standard errors were applied at the firm level. To ensure robustness to model specification and the moderator variable’s definition, robustness tests were conducted using the Ordered-Logit regression with a decile-ranked dependent variable, and the moderator variable was calculated differently. The study's population consists of 143 firms during 2012-2023 (1,716 firm-years) across 11 industries. Data from the previous three periods (2009-2011) were used to assess the values of some variables. To handle outliers, all continuous variables were winsorized at the 1st and 99th percentiles.FindingsThe results of this study reveal a positive and significant coefficient for the variable H_Capex, indicating that firms with high capital expenditures are more likely to exhibit dividend stickiness compared to other firms. Additionally, the positive and significant coefficient of the Over_Invest variable suggests that firms displaying over-investment behavior are more prone to dividend stickiness. These findings demonstrate a positive and significant relationship between managers' overconfidence and dividend stickiness, confirming that the first hypothesis of the research is not rejected. Furthermore, the negative and significant coefficient of the H_Capex×DP_firm indicates that an increase in catering incentives weakens the positive relationship between high capital expenditures and dividend stickiness. Similarly, the negative and significant coefficient of the Over_Invest×DP_firm shows that an increase in catering incentives weakens the positive relationship between over-investment and dividend stickiness. These results suggest that an increase in catering incentives mitigates the relationship between managers' overconfidence and dividend stickiness, leading to the non-rejection of the second hypothesis. The research findings remain robust when controlling for the effects of macroeconomic variables, the impact of the COVID-19 pandemic, the use of the ordered logit model, and an alternative measure for moderating variable.Conclusion & ResultsThe phenomenon of dividend stickiness has garnered attention from researchers in recent years, yet despite its significance, it has received limited attention in domestic research. This study investigates the existence of dividend stickiness in Iranian firms, examines the relationship between managers' overconfidence and dividend stickiness, and assesses the impact of catering incentives on this relationship. The research findings demonstrate that dividend stickiness is prevalent among Iranian firms, aligning with the findings of Beshkooh and Moharram Khani (2020). Furthermore, the results indicate that the phenomenon of dividend stickiness is more observable in firms with overconfident managers and that the relationship between managers' overconfidence and dividend stickiness weakens with an increase in catering incentives. These results, consistent with the findings of Baker and Wurgler (2004) and Lin and Yu (2023), align with the concepts proposed in the catering theory.
The proper implementation of corporate governance in companies plays a significant role in their management and leadership, protecting the interests of shareholders and preventing opportunistic behavior by managers. Considering this issue and the new corporate governance code in the Iranian capital market, in this research, the impact of the new corporate governance code on accrual-based earnings management and real earnings management is investigated. The statistical sample of the research included 117 companies listed in Tehran Stock Exchange during the years 2014 to2021. The results of the research based on regression analysis of panel data indicated that the new corporate governance code had a negative and significant impact on earning management based on the manipulation of accruals. Also, the results have shown that the announcement of the corporate governance code had a negative and significant impact on real earning management based on the manipulation of production costs, discretionary costs, and operating cash flows. Therefore, the requirements of the Securities and Exchange Organization regarding corporate governance in the capital market have been able to lead to the protection of investors' rights and the improvement of the quality of financial reporting of companies. IntroductionThe issue of corporate governance has been noticed around the world since the beginning of 2000, and almost every country is trying to implement good corporate governance practices in their business companies. Corporate governance is the set of relationships between executive directors, board members, shareholders, and other stakeholders of the company, which determines a structure for formulating the company's goals and ways to achieve them, as well as how to evaluate and monitor performance (OECD, 2004). The goal of corporate governance is to reduce agency problems and costs to maximize shareholder wealth. Previous research has shown that companies with good corporate governance have better financial performance, higher stock liquidity, and lower bankruptcy risk. Corporate governance can reduce the information asymmetry between internal and external organizations and make corporate information more transparent (Nguyen et al., 2024).Considering the regulatory and legal changes and the process of corporate governance in all countries and internationally, today the importance of implementing effective corporate governance has been continuously noticed in the capital markets and companies are obliged to inform the public about their corporate governance measures. In Iran, the corporate governance guidelines were approved in June 2018 by the Board of Directors of the Securities and Exchange Organization in six chapters: definitions, board of directors and CEO, general meetings of shareholders, how to select board members and independent board members, and accountability and disclosure of information. This instruction was notified for the compliance of companies admitted to the Tehran stock exchange and Iran Fara bourse. Also, this instruction was revised in different stages, the last revised version of which is from 2023 (Stock Exchange Organization, 2023). Considering the above and considering the newness of the corporate governance guidelines in the Iranian capital market as well as the importance of the effects of the aforementioned regulations on companies, the main issue of this research is to investigate the effect of the notification of the aforementioned guidelines on the behavior of companies' earnings management.It should be noted that so far, no research has been conducted that has investigated the effect of internal corporate governance regulations on various dimensions of financial reporting quality, and the results of this research can represent the results of the efforts that have been made to formulate corporate governance regulations. In this research, earnings management through accrual management and real earnings management have been considered. Also, to measure real earnings management, real earnings management based on manipulation of production costs, discretionary expenses, and operational cash flows has been used.Based on the above, research hypothesis are:1) Announcement of corporate governance guidelines has a significant negative impact on earnings management based on the manipulation of accruals.2) Announcement of corporate governance guidelines has a significant negative impact on real earnings management based on the manipulation of abnormal production costs.3) Announcement of the corporate governance guidelines has a significant negative impact on the real earnings management based on the manipulation of abnormal discretionary expenses.4) Announcement of corporate governance guidelines has a significant negative impact on real earnings management based on the manipulation of abnormal operating cash flow. Research MethodologyThis research is placed in the category of applied research; Because its basic purpose is to find solutions for existing problems and current conditions. Secondary data is usually used to conduct this type of research. In this research, the researcher describes the nature of the topic in question. Therefore, it is a type of descriptive research. Also, the current research can be considered correlational research; Because it examines the relationship between variables and their explanation. In general, to conduct any research, two types of information are needed: the library part and the experimental part; In this research, to collect library and experimental information, books, magazines and specialized articles, financial statements, explanatory notes, as well as existing information banks, such as Rahvard Novin, Codal and the stock exchange website, were used respectively. The software used to test all the models of this research is the 9th version of EViews.The statistical population of this research is all the companies admitted to the Tehran Stock Exchange during the years 2014 to 2021. The sample was selected from among the companies listed in the Tehran Stock Exchange using some criteria. According to the criteria, among all the companies listed in the Tehran Stock Exchange, 117 companies were considered as the investigated companies in this research. Conclusion and discussionThe results of testing the hypotheses of this research showed that none of the hypotheses examined in this research were rejected and the announcement of corporate governance guidelines affects earnings management (accrual earnings management and real earnings management based on the manipulation of production costs, discretionary expenses, and operating cash flows). It has had a significant negative effect and has led to the reduction of managers' opportunistic manipulations. Based on the result of the first hypothesis, the announcement of the corporate governance guidelines of the Stock Exchange and Securities Organization has led to the reduction of earnings management based on accruals. In the interpretation of this result, it can be said that the requirements contained in the mentioned instructions to strengthen the corporate governance mechanisms at the level of capital market companies have been able to reduce the possible motivation of managers to manipulate earnings by using allowed accounting procedures and through accruals and therefore, it seems that with the help of this guidelines, the capital market supervisory body has been able to reach its final goal, which is to support the stockholders, especially the shareholders. In other words, the recent requirements of corporate governance have succeeded in improving the quality of financial reporting and the quality of companies' earnings, and this promises investors that they can make decisions regarding their investment options in the capital market with more trust and confidence in the financial reports of companies. According to the results of the second to fourth hypotheses of this research, it can be said that the establishment of corporate governance requirements in Iran's capital market has led to a decrease in real earnings management through the manipulation of production costs, discretionary expenses, and operating cash flows. In this regard, as it was stated in some previous research, the establishment of disclosure requirements and regulations and corporate governance has led to the change of earnings management procedures from the management of accruals to the real management of earnings; This is while, based on the results of this research, the implementation of corporate governance mechanisms has had significant negative effects on the real earnings management. Among the reasons for this, it can be mentioned that in the existing corporate governance rules, the subject of transactions with related parties, which is one of the tools used for real earnings management, has been given special attention. Also, in the third chapter of the corporate governance guidelines, the necessary characteristics for the members of the board of directors and the CEO have been described, that they must have the necessary education and experience and have no definite criminal or disciplinary convictions subject to the laws and regulations of the capital market, and it seems that with these requirements, relatively more knowledgeable managers have played a role in the board of directors of companies and have been able to reduce the motivation of executive managers to manipulate the real activities of the company in the direction of real earnings management.According to the results of this research and considering the inhibiting effects of the implementation of corporate governance on the earnings management of companies, it is suggested that supervisory institutions such as the Securities and Exchange Organization as a supervisory institution for companies have more supervision and control over the implementation of corporate governance principles and related regulations; Because the results of this research have shown that establishing these criteria can reduce the opportunistic actions of managers. It is also suggested to provide the conditions for improving the ability and skills of the members of the board of directors by holding continuous training sessions about the implementation of the corporate governance guidelines of the Securities and Exchange Organization. In addition, creditors, shareholders, and investors are suggested to take into account the degree of compliance with the corporate governance guidelines in reviewing the company's situation and making their decisions; Because better compliance with this instruction reduces the possibility of earnings management behavior based on accruals and real earnings management in companies. Based on the results of this research, future researchers are suggested to investigate the effect of the announcement of corporate governance rules on the quality of financial statements and reports as well as the quality of internal control reports of companies. Also, considering the relationship between corporate governance and independent auditors, it is suggested to pay attention to the impact of the notification of the mentioned rules on the audit quality. In addition, a comparative study of the hypotheses of this research by industries is recommended.
Information disclosure is considered one of the most important aspects of corporate performance and decision-making. Managers' decisions regarding the extent and manner of information disclosure will have a significant impact on the decision-making of other market players. The purpose of this research is to investigate the effect of information disclosure by peer companies on managers' decision-making regarding the level of disclosure of companies listed on the Tehran Stock Exchange. The moderating role of reliance on external financing is also examined. The research method combines deductive and inductive approaches, and data from 113 companies over 10 years have been studied. The results showed that information disclosure by peer companies has a positive and significant effect on the disclosure of the companies under study. These results indicate that the information published by peers acts as a driver for increased corporate disclosure. Regarding the moderating role of reliance on external financing in the relationship between peer disclosure and corporate disclosure, the results showed that this factor does not have a significant effect on this relationship. Therefore, this feature does not have a significant impact on the effect of peers on corporate disclosure.IntroductionThe disclosure of information is considered one of the most important aspects of corporate performance and decision-making. This concept refers to how companies convey essential financial and non-financial information to stakeholders, including investors, regulatory bodies, and the public. Management decisions regarding the scope and manner of information disclosure significantly influence the decision-making processes of other market participants, affecting everything from investment strategies to perceptions of corporate value. In today's competitive environment, transparency and accountability have emerged as critical topics, as stakeholders increasingly demand a deeper understanding of corporate operations and governance.Despite extensive research on corporate disclosure policies, the role of peer companies in disclosure is often overlooked. Peer companies can serve as benchmarks for comparison and sources of competitive pressure, shaping how companies relate to their performance and prospects. This study aims to fill this gap by examining the impact of information disclosure by peer companies on management decisions regarding the level of information disclosure in companies listed on the Tehran Stock Exchange. Understanding how peer companies influence disclosure practices can provide valuable insights into corporate governance dynamics and market behavior. Furthermore, the moderating role of external financing dependence in the relationship between peer disclosure and corporate disclosure will also be explored. MethodologyThe present research is considered a fundamental study in terms of purpose. The research method was a combination of comparative and inductive methods. The statistical population consisted of 113 companies listed on the Tehran Stock Exchange, which were studied over 10 years from 2012 to 2021. The required data included financial and non-financial information extracted from the financial statements and board of directors' reports of the companies. The data collection method was library and documentary, and the data were collected in a combined (cross-sectional-time series) manner. To identify peer effects, Manski's (1993) model is employed. Linear multivariate regression models, along with the two-stage least squares method using average idiosyncratic equity returns of peer firms in the same industry (Pshock) as the instrumental variable, were used to analyze the data and test the research hypotheses. Statistical analyses were performed using EViews software. FindingsEffect of peer information disclosure on corporate disclosure: The results of the analysis showed that information disclosure by peer companies has a significant positive effect on the disclosure of the companies under study. These results indicate that the information published by peers acts as an incentive for greater disclosure by companies. The moderating role of dependence on external financing: Regarding the moderating role of dependence on external financing in the relationship between peer disclosure and corporate disclosure, the results showed that this factor does not have a significant effect on this relationship. In other words, greater or lesser dependence on external financing does not affect the role of peer companies in corporate disclosure. ConclusionThis study shows that information disclosure by peer companies can have a positive effect on the disclosure of other companies' information. With increased transparency of information by peers, companies move towards greater disclosure. This is because reduced external uncertainty and increased accuracy of management's private information encourage the company to disclose more. Additionally, dependence on external financing does not play a significant role in this relationship, and therefore this characteristic does not have a significant impact on the influence of peers on corporate disclosure. Possible reasons for this include the collateral-based nature of financing in Iran, which leads creditors and investors to focus more on the value of collateral rather than the disclosed financial information. Moreover, the specific economic conditions during the period from 2018 to 2020, characterized by an influx of liquidity into the capital market and a decrease in financing costs, enabled companies to attract capital easily, even without full disclosure of information. In this context, investors may pay less attention to the details of the disclosed information and be more influenced by the overall market sentiment. These factors may explain the lack of enhancement in the effect of peer information disclosure in conditions of greater dependence on external financing.
Considering that one of the factors influencing credit ratings is the quality of corporate governance and that credit ratings affect stock liquidity in the capital market by influencing investors' decisions, this study aims to investigate the mediating effect of credit ratings on the relationship between corporate governance quality and stock liquidity over 10 years from 2013 to 2022. In this regard, for the first time in Iran, a composite liquidity index was used to calculate stock liquidity. The data collection method involved document analysis and reference to databases, and the data analysis method was inferential. To test the research hypotheses, a panel data model was used. Emphasizing the reverse structure of the composite liquidity measure, the findings of the study indicated that corporate governance quality has a positive and significant impact on stock liquidity and that credit ratings play a partial mediating role in the relationship between corporate governance quality and stock liquidity.IntroductionThe purpose of this study was to investigate the mediating effect of credit rating on the relationship between the quality of corporate governance and stock liquidity. In this regard, it was first noted that the existence of a highly liquid market is important and necessary to encourage and attract investors to transfer wealth to such markets. This is because one of the key drivers of any country's economy is its capital market, and a crucial factor in these markets is stock liquidity. Therefore, understanding the factors that contribute to the creation of a highly liquid market is of great importance. Research literature indicates that information asymmetry is a phenomenon that reduces the level of awareness among market participants. In such cases, investors cannot accurately assess the value of a company's shares and make rational decisions to buy or sell them. Additionally, it has been noted that accounting information alone cannot adequately evaluate a company's performance or serve as a reliable basis for investors' decisions. In this context, corporate governance is presented as a set of relationships between the company's management, the board of directors, shareholders, and other stakeholders. It is argued that corporate governance, by improving company performance, significantly enhances the quality of information provided to the market and, by reducing information asymmetry, increases stock liquidity. Moreover, the advantages of rating institutions have been examined both theoretically and empirically. It has been stated that these institutions, by accessing confidential information and transferring it to the market in the form of credit ratings, can influence investors' decision-making. Additionally, corporate governance is recognized as an influential factor in the credit rating process.Methods & MaterialThis research is applied in nature and employs multivariate regression analysis to examine the relationship between the study variables. The research methodology is of an ex post facto type. Additionally, since it aims to evaluate the relationship between two or more variables, it is descriptive-correlational in nature. Based on the criteria applied for selecting the statistical sample, 101 companies were chosen for the period from 2013 to 2022 to test the hypotheses. Data analysis was conducted using Stata and EViews software.FindingThe results indicate the presence of an inverse and significant relationship between the quality of corporate governance and credit rating with the composite liquidity criterion. Considering the inverse structure of the composite liquidity index and the negative and significant relationship between the quality of corporate governance and credit rating with this index, i.e., composite liquidity, it can be concluded that higher corporate governance quality scores and, consequently, higher credit ratings are associated with higher share liquidity. Conversely, lower governance quality scores and credit ratings correspond to lower share liquidity. The obtained results indicate that credit rating as a mediating variable is a partial mediating factor in the relationship between the quality of corporate governance and stock liquidity. In this way, the third hypothesis of the research is confirmed, and the quality of corporate governance has both a direct and an indirect effect on the liquidity of stocks. It can be said that the quality of corporate governance in companies with a high credit rating increases the liquidity of the companies' shares.Disscussion and Conclusion The results indicate that credit rating, as a mediating variable, is a partial mediator in the relationship between the quality of corporate governance and stock liquidity. Based on the findings, it can be stated that corporate governance directly influences the liquidity of a company's shares. Additionally, by achieving a higher credit rating, corporate governance indirectly encourages investors to buy and sell the company's shares, thereby increasing their liquidity.
Abstract Expenses classification shifting significantly compromises the quality of core earnings, resulting in misleading information about firms’ core and sustainable performance. Classification shifting can be a direct and unintentional consequence of overconfident CEOs’ cognitive bias. Also, overconfident CEOs might consciously and intentionally misclassify recurring expenses as nonrecurring items to inflate core earnings; however, if the firms’ financial statements are more comparable to those of their industry peers, stronger monitoring leads to fewer opportunities to manage earnings. The purpose of the present study is to investigate the impact of managerial overconfidence on expense classification shifting based on the moderating role of the comparability of financial statements. The sample consists of 130 companies in the period 2015-2022. The results showed that managers' overconfidence leads to increased expense classification shifting and a piecemeal decrease in classification shifting over time. In addition, the comparability of financial statements is an obstacle to managers' overconfidence in expense classification shifting and their piecemeal reduction over time. Therefore, the market participants should pay serious attention to the overconfident CEOs’ and the comparability of financial statements to expense classification shifting. Key words: Expenses Classification Shifting, Managerial Overconfidence, Comparability of Financial Statements. Introduction A stream of research shows that managers purposely classify essentially persistent expenses in the special items category and engage in classification shifting. Classification shifting differs from accruals and real earnings management in that it is a less costly earnings management tool that inflates the core performance of the firm and misleads investors about the firm’s sustainable core profitability. Prior studies on classification shifting focus mainly on firm-level factors and little is known about whether executive attributes are associated with firms’ propensity to engage in classification shifting. Our study fills this void by investigating whether and how an important individual characteristic, CEO overconfidence, is associated with classification shifting. In this regard, considering the opportunities for earnings manipulation, the comparability of financial statements may also play a role in the relationship of Managerial Overconfidence and Expenses Classification Shifting. Also, this research adds to the body of literature probing the financial reporting quality of firms with overconfident managers. Methods & Material The statistical population in this research is all the companies listed on Tehran Stock Exchange and the period under investigation is from 2015 to 2022. In this research, the systematic elimination method was used to reach the sample, and 130 companies were selected as the research sample. The research model is estimated through panel data by controlling the effects of industry and year by ordinary least squares method with robust standard error. Finding The findings of the first hypothesis show that managers' overconfidence leads to an increase in expense classification shifting and a piecemeal decrease in classification shifting over time. In addition, the findings of the second hypothesis show that the comparability of financial statements is an obstacle to managers' overconfidence in expense classification shifting and their piecemeal reduction over time. Conclusion & Results In this study, the association between an important behavioral attribute of CEOs, managerial overconfidence, and the occurrence of classification shifting has been investigated. The findings showed that managerial overconfidence is related to an increase in unexpected core earnings via reclassifying recurring expenses to special items and that the association between managerial overconfidence and classification shifting is more evident for firms whose financial statements are more comparable with their peers in the industry because stronger monitoring leads to fewer opportunities to manage earnings. The evidence shows that increased financial comparability can mitigate the effects of managerial overconfidence on classification shifting. Together, these results suggest that overconfident CEOs intentionally engage in classification shifting and inflate core earnings, and this relation is more pronounced when CEOs have strong incentives and more opportunities to engage in misconduct. This study provides evidence that an important managerial attribute of CEOs, overconfidence, plays a significant role in explaining firms’ practice of classification shifting, and that classification shifting conducted by overconfident CEOs is driven by intended actions rather than unintentional behavior. Thus, the results suggest that regulators should also pay attention to the practice of classification shifting, considering the management style of CEOs.
Because the risk of falling stock prices has a significant impact on investment decisions and the optimal allocation of resources, it is essential to understand the factors affecting this phenomenon and its underlying factors. Based on the rational stock pricing structure in the Iranian capital market, this study measures the risk of falling stock prices and its alignment with price bubbles. To analyze and test the research hypothesis, data related to 30 companies admitted to the Tehran Stock Exchange for the period 1390-1401 were extracted. For this study, the stock price fall measurement model was estimated for the sample companies, and then its efficiency was measured and evaluated with the Kupiec test, and it was confirmed at a 95% confidence level. After estimating the capital assets pricing models, this study used Bartlett, Lunn, and Brown-Forside tests to assess the alignment between falling stock prices and bubbles. The results showed that there is no alignment between the variance of the risk of falling stock prices and bubbles based on the rational stock pricing structure in our country's context. Therefore, in our country, falling stock prices in line with price bubbles are not based on rational stock pricing.Introduction The subject of falling stock prices is a complex, ambiguous, multifaceted, and widespread phenomenon that cannot be attributed to a specific factor with certainty. A stock price crash is a phenomenon in which the stock price undergoes a sharp and sudden adjustment, followed by a very large and unusual negative change in the stock price, and is considered a phenomenon synonymous with negative skewness in stock returns. Based on theoretical foundations, the risk of falling stock prices is influenced by a range of internal and external factors such as financial variables, business strategies, managerial ability, information asymmetry, macroeconomic variables, political connections, investors' feelings, and fulfilling social responsibilities of the company. Nevertheless, in the accounting and financial literature, the risk of falling stock prices is mainly due to the accumulation and maintenance of negative news by management and its sudden release in the market, creating negative shocks and the formation of changes in investors' beliefs about the company's value, and as a result, the successive reduction of prices and the fall of stock prices. It seems that the occurrence of the phenomenon of falling stock prices, regardless of the reason or consequences, is rooted in the formation of a price bubble and incorrect pricing due to the effect of the underlying factor(s) that cause it. The formed price bubbles cause incorrect pricing and prevent asset valuation based on capital asset pricing models. Given that in previous research, stock price bubbles have been evaluated and measured in several ways, but so far in domestic research, no research has been done to measure price bubbles through capital asset pricing models. Based on this, the basic question of the current research is whether there is an alignment between the risk of falling stock prices and price bubbles based on the rational stock pricing structure in the environmental conditions of our country. Methods & MaterialThe current research is of a quantitative type and because it is based on the description of the real relationships between the existing data that is expressed in the form of a model, it is considered descriptive research. For this purpose, first, the real aspects of the relations are known and then the model is presented based on the hypothesis and the relevant relations. In this research, first, to complete the theoretical foundations, the library method and the study of reliable sources were used. Then, to collect the research data, Rahavard Novin software and the official website of the Tehran Stock Exchange Company were used. The time domain of the research is the period between 2011 and 2022. The statistical population of the research is the companies admitted to the Tehran Stock Exchange. Next, using a simple random sampling method, 30 companies admitted to the Tehran Stock Exchange were selected as the research sample. FundingIn the recent research, following the research of Chen et al. (2001) and Andror et al. (2016), first the stock price fall measurement model was estimated for the sample companies of the research and then the validity of the model was evaluated with the Kupiec test and it was confirmed at a confidence level of 95%. In the following, after estimating the capital assets pricing models. To measure the alignment of the risk of falling stock prices with bubbles based on the rational stock pricing structure, Bartlett, Levenr, and Brown-Forsythe tests were used. The results of the equality test of the variance of the stock price fall risk with the price bubbles based on the rational stock pricing structure showed that there is no alignment between the stock price fall risk variance and the bubbles based on the rational stock pricing structure. These results show that in the environmental conditions of our country, standard financial models, in which non-emotional investors always force market prices to equal their expected utility, cannot provide a complete insight into asset pricing anomalies in the conditions of collapse and price bubbles. In other words, in our country, the condition of falling stock prices in line with the formed price bubbles is not based on rational stock pricing. Conclusion & ResultsBased on the results of the recent research, it was determined that the behavior model of investors in the environmental conditions of our country is not consistent with classical and logical financial models, and is more related to behavioral financial models that are based on mass behavior and the induction of feelings and emotions, which are defined as false beliefs about future cash flows and risks, and significantly affect the price of assets, and subsequently cause the market to go out of balance. In sum, recent evidence has violated the concept of market efficiency and recognized the impact of psychological biases on investor behavior and asset prices. The results of this research are in line with the research of Fang et al. (2022) and Perdomo Strauch (2020). They showed that the reaction of market prices to changes in the discount rate and the hypothesis of market efficiency are not aligned. In this regard, while paying attention to behavioral models, it is suggested that to protect the interests of investors, encouraging and directing indirect investment in the capital market and using specialized consulting services to find the right entry and exit point to the market should be on the agenda and should be given special attention to investors so that the effects of emotions and emotional decisions can be controlled to some extent.
The purpose of this research is to investigate the factors affecting unethical pro-organizational behaviors by accountants. Unethical pro-organizational behaviors refer to behaviors that are done to help the organization or its members. In this research, social exchange theory has been used to explain the pro-organizational aspect of these types of behaviors and social cognition theory has been used to explain their unethical aspect. The statistical population of this research is made up of chief financial officers and accountants of manufacturing companies. The required data was collected through standard questionnaires from 181 chief financial officers and accountants in 2023. In this research, structural equation modeling by the partial least squares method was used for data analysis. The results of the hypothesis test indicate that the construct of perceived organizational justice has a positive and significant effect on the constructs of positive social exchange and organizational identity. In addition to this, positive social exchange and organizational identity constructs have positive and significant effects on unethical pro-organizational behaviors, although, in this research, no evidence of the moderating effects of positive reciprocity beliefs and moral identity constructs was found in the relationship between positive social exchange and organizational identity with the unethical pro-organizational behaviors. The results of this research show that the simultaneous use of social exchange theory and social cognition theory can provide a suitable framework for explaining the unethical pro-organizational behaviors of accountants. Introduction In the literature on unethical behaviors in recent years, the view has been raised that unethical behaviors are not always done with the intention of opportunism and harming colleagues and the organization, but sometimes employees perform these unethical behaviors to help the organization or its members. These behaviors are known as unethical pro-organizational behaviors. The story of the recent widespread ethical crises is also proof of the severity of this type of behavior in organizations. Helping accountants to the company to implement financial frauds, earnings management, and refraining from disclosing information to the public to support the company are examples of these behaviors (Tian & Peterson, 2016). Considering that unethical pro-organizational behaviors do not benefit the organization in the long run and lead to a decrease in public trust and the imposition of significant costs on external stakeholders, extensive research has investigated the issue of "what factors are effective in the occurrence of unethical pro-organizational behaviors?” (Umphress & Bingham, 2010; Umphress & Bingham, 2011; Graham et al., 2016; Chen et al., 2016; Tian and Peterson, 2016; Mahlendorf et al., 2018; Wang et al., 2019; Bryant & Merritt, 2021; Coppins & Weststar, 2023; Luan et al., 2023(. The issue that doubles the necessity of conducting this research is the complexity of unethical pro-organizational behaviors because of the simultaneous existence of motives for the interests of the organization and their unethical nature. Based on this, the present study aims to investigate the factors affecting unethical pro-organizational behavior by accountants. Addressing this research leads to the expansion of knowledge in the field of unethical behavior in accounting and has applications for company managers and legislators to prevent the occurrence of unethical pro-organizational behavior in companies. Researchers have used two categories of theories to explain the drivers of these behaviors by using the two components of unethical and pro-organizational. The social exchange theory, which is widely used to explain the pro-organizational aspect of this type of behavior, considers unethical pro-organizational behaviors as a source of social exchange and indicates that employees may perform unethical pro-organizational behaviors to mutually support and compensate for the care of the organization. The theory of social cognition, which is often used to explain the unethical aspect of this type of behavior, emphasizes the concept of moral disengagement and states that unethical behavior occurs when people abandon moral self-regulatory criteria and find justification for their unethical behavior (Luan et al., 2023). In this research, to theoretically explain the effect of organizational justice, positive social exchange, and positive reciprocity beliefs on unethical pro-organizational behaviors by accountants, the theoretical framework provided by social exchange theory is used. Also, to theoretically explain the effect of organizational identification and moral identity on unethical pro-organizational behaviors by accountants, the theoretical framework provided by social cognition theory is used. Based on this, the following hypotheses are presented: Hypothesis 1: Organizational justice has a positive and significant effect on positive social exchange in accountants. Hypothesis 2: Organizational justice has a positive and significant effect on the organizational identification of accountants. Hypothesis 3: Positive social exchange has a positive and significant effect on the unethical pro-organizational behavior by accountants. Hypothesis 4: Organizational identification has a positive and significant effect on the unethical pro-organizational behavior by accountants. Hypothesis 5: Positive reciprocity beliefs moderate the effect of positive social exchange on unethical pro-organizational behavior by accountants. Hypothesis 6: Moral identity moderates the effect of organizational identification on unethical pro-organizational behavior by accountants. Methodology The current research aims to investigate the factors affecting the unethical pro-organizational behavior of accountants. The data collection tool is a questionnaire, and the data was collected in the first half of 2023. In this research, standard questionnaires were used to measure the constructs, and adjustments were made according to the opinion of experts to obtain content validity. The statistical population of this research includes accountants and chief financial officers of manufacturing companies. More than 400 questionnaires were sent online, 208 questionnaires were received, and 181 questionnaires were analyzed. In this research, Excel 2019 was used to prepare the data. In addition, hypothesis testing and data analysis were done using the partial least squares structural equation modeling and with SmartPLS3. Results This study evaluated the structural model by examining the significance of path coefficients, coefficient of determination ( ), and variance inflation factor (VIF). It was found that H1 was supported indicating that organizational justice maintains a positive and significant effect on the positive social exchange ( = 0.818, t= 27.416, p-value< 0.05). Organizational justice also has a significant positive influence on organizational identification ( = 0.766, t= 26.899, p-value< 0.05), thus H2 was supported. The results revealed that positive social exchange has a significant positive effect on the unethical pro-organizational ( = 0.328, t= 3.596, p-value< 0.05), indicating support for H3. As for H4, in which it was hypothesized that organizational identification would have a positive influence on the unethical pro-organizational, the results showed a significant and positive relationship ( = 0.322, t= 2.992, p-value< 0.05). Therefore, H4 was supported. Regarding H5, in which it was hypothesized that positive reciprocity beliefs moderate the effect of positive social exchange on unethical pro-organizational behavior by accountants, the results did not support this relationship ( = 0.105, t= 1.361, p-value> 0.05). Also, this study examined the moderating effects of moral identity on the relationship between organizational identification and unethical pro-organizational behavior. The results did not support this relationship ( = 0.116, t= 1.494, p-value> 0.05). Conclusion The findings of this research show that the unethical behaviors of accountants are often influenced by a combination of personal and situational characteristics, or organizational factors, and a person–situation interactionist model is presented in examining the factors affecting unethical pro-organizational behaviors. These findings have applications for companies and legislators to reduce unethical behaviors and can provide practical solutions for how to train accountants by higher-level managers to prevent unethical pro-organizational behaviors. Moreover, since according to the social cognition theory, unethical behavior occurs because of moral disengagement and justification of accountants, the ethical behavior of managers, as a role model in the company, can play an important role in reducing accountants’ moral disengagement and their desire to justify. In addition, in this research, the positive and significant effects of positive social exchange and organizational identification on unethical pro-organizational behaviors by accountants were pointed out, which indicates that these constructs can act like a double-edged sword. Although before, these constructs were referred to as productive to advance the goals of the organization, they can create unfavorable consequences for the organization at the same time. Therefore, managers can play an important role in reducing unethical behaviors by considering the positive and negative consequences of these constructs. * Corresponding author
One of the most critical responsibilities of bank managers is liquidity management. The purpose of this study is to design and implement a combined mathematical model of the Analytical Hierarchy Process (AHP) and Goal Programming (GP) for bank liquidity management. Initially, a conceptual model was drawn up, followed by the definition of model variables based on the bank's financial statements. Due to the presence of multiple, conflicting goals and the differing importance of each goal, the GP technique was utilized. The weighted nature of the GP model allowed for the calculation of the importance of ratios affecting the bank's liquidity within the objective function through the Analytical Hierarchy Process. The model was solved, and the analytical results were presented to bank officials. Finally, the effectiveness of the proposed model was validated through a survey of seven main questions related to seven evaluation dimensions from 30 banking experts. Given the similarities in banking systems in the country, using the proposed model and pattern of this research, with minor modifications, the necessary grounds for efficient liquidity management can be provided in other banks as well. IntroductionBanking is one of the most important businesses in the economy and serves as the primary bridge between the supply and demand of monetary resources. The principal functions of the banking system involve the management of the provision and allocation of monetary resources and the provision of monetary services in the money market (Basel Committee on Banking Supervision, 2008).In Iran, banks operate as economic service institutions that earn profits through Islamic contracts and partnerships with clients (Abdorrahimian et al., 2020). Banking is the art of managing liquidity challenges, and liquidity management plays a crucial role in the survival, continuity, and success of banks. Consequently, it is expected that economic enterprises with appropriate liquidity management systems will have lower risks of liquidity and bankruptcy.Bank liquidity management includes forecasting the bank's liquidity needs over time and meeting these needs with the least costs and risk and the maximization of bank value. Liquidity management is the process of managing and balancing between risk and return. (Glants & Mun, 2002).Given the multiple objectives of banks and the difficulty or impossibility of simultaneously achieving all these diverse and often conflicting goals, the question of this research is what kind of model is the optimal liquidity management model for the banks? This applied research aims to answer the aforementioned question through the design, implementation, testing, and evaluation of a mathematical model of liquidity management in banks, while observing the ratios affecting the bank's liquidity within the standard limit, to optimize the amount of bank liquidity and the variables of the liquidity system inputs and outputs. Methods and MaterialTo develop an optimal mathematical model for bank liquidity management, the steps include identifying the system's input and output variables, recognizing the most influential ratios, selecting the appropriate mathematical model type, determining the model variables and parameters, establishing the system and goal constraints, and formulating the objective function. After solving the model, the results were compared with the bank's current state to plan the transition to a desired state. Finally, the effectiveness of the proposed model was evaluated by 30 bank users and experts. FindingsThe proposed model enables sensitivity analysis of parameters and the examination of various scenarios. If there are practical limitations, alternative optimized solutions can be prepared to implement the most feasible solution vector and outline corrective actions in a roadmap (Anvary Rostamy & Nematolahi Ardestani, 2003). Although these alternatives slightly deviate from the optimal initial value, they offer the most practical benefits. The model was evaluated across seven dimensions: flexibility, usability, impact, acceptability of variables, accuracy of goal and systemic constraints, and ease of understanding and application by 30 banking experts. The evaluation results confirmed the flexibility, practicality, and suitability of the considered ratios and variables, as well as the appropriateness of the model's goal and systematic constraints at a 95% confidence level. Conclusion & ResultsThis research aimed at designing an optimal mathematical model for managing bank liquidity. The goal programming model was used due to the multitude and contradictions among decision-making criteria. The model was developed using data from a specialized bank sample and then was tested. The effectiveness of the proposed model was reviewed, scored, and approved by 30 banking professionals and experts. The results of solving the models enable the formulation of a road plan and allow managers to immediately see the results of any potential changes in the model. This modeling tool also enables managers to create future scenarios and plan corrective actions. Given the similarities in the Iranian banking operations, despite some differences, the application of the proposed conceptual and operational model with minor modifications will provide the necessary conditions for more efficient liquidity management in other banks.The authors suggest considering off-balance sheet items and economic and political shocks and risks in the model completion and modeling using fuzzy data. Future research could measure the bank's liquidity sensitivity to changes in the economic market, such as changes in exchange rates, the country's exports and imports, and competitor markets like capital markets and real markets. * Corresponding author
One of the goals of firms is to optimize their capital structure. Due to transaction costs, the actual capital structure is always deviated from the optimal and cannot be immediately adjusted. Therefore, examining the factors affecting the financial leverage adjustment speed can be important. This research aims to investigate the effect of economic uncertainty and investment increase on the financial leverage adjustment speed. For hypothesis testing, a sample of 130 companies listed on the Tehran Stock Exchange during the period 2016-2021 was selected, and hypothesis testing was carried out using multiple regression and panel data. The results of hypothesis testing show that economic uncertainty has a positive and significant effect on the financial leverage adjustment speed in firms with excessive financial leverage, but this effect is not significant in firms with lower financial leverage. Additionally, firms with excessive financial leverage have a slower rate of leverage adjustment during periods of investment increase than during normal periods. However, investment increase has no effect on the financial leverage adjustment speed in firms with lower financial leverage. Moreover, the results show that in conditions of investment increase, firms with excessive financial leverage and low economic uncertainty have a leverage adjustment speed close to zero, while economic uncertainty has no effect on the financial leverage adjustment speed in firms with lower financial leverage during periods of investment increase.IntroductionMany studies on capital structure have shown that firms continuously adjust their financial leverage based on changes in their internal and external environment to maximize their financial security, financing, and value. One of the factors affecting the financial leverage adjustment speed of firms is the uncertainty of economic policies. Economic policies including monetary, financial, regulatory, and tax policies, shape the business environment. Economic uncertainty can be a major reason for the financial leverage adjustment speed of firms due to its intangible nature (Dang et al., 2012; Fernando et al., 2021; Im et al., 2022). On the other hand, periods of investment growth provide valuable opportunities to achieve a theoretical framework for corporate capital structure decisions because major investments usually require external financing (Tan et al., 2021). Therefore, this study examines the impact of economic uncertainty on the speed of adjustment of financial leverage and the role of economic uncertainty in the intensity of the effect of investment growth on the financial leverage adjustment speed in firms with excessive and lower financial leverage. Methods & MaterialA sample of 130 companies listed on the Tehran Stock Exchange during the period 2016-2021 was selected for testing hypotheses. Multiple regression and panel data were used to examine the hypotheses. The dependent variable is the financial leverage adjustment speed, and the independent variables are economic uncertainty and investment growth. The research hypotheses were examined separately in companies with excessive and lower financial leverage.FindingThe study's findings reveal that high economic uncertainty in firms with excessive financial leverage leads to an increase in the speed of financial leverage adjustment. However, in firms with less financial leverage, economic uncertainty has no significant effect on the speed of adjustment. The results also suggest that firms with excessive financial leverage exhibit a slower leverage adjustment speed during periods of increased investment. Conversely, firms with less financial leverage are unaffected by an increase in investment and exhibit no significant difference in the speed of leverage adjustment. Furthermore, other findings have also shown that in firms with excessive financial leverage and low economic uncertainty, an increase in investment does not impact the financial leverage adjustment speed. Finally, contrary to expectations, in conditions of increased investment, firms with lower financial leverage and less uncertainty do not have a greater leverage adjustment speed. Conclusion & ResultsWhen there is high economic uncertainty and a firm has excessive debt, then due to pressure from financial suppliers, firms are forced to reduce their debt. As a result, the financial leverage adjustment speed increases. In firms with less-than-optimal levels of financial leverage, since the leverage ratios of such firms are almost below the optimal level, economic uncertainty does not significantly affect the cost of increasing debt and the financial leverage adjustment speed. When there is an increase in investment in a year and the company also has excessive debt, then the increase in investment due to increased financial supply pressure causes firms to adjust financial leverage towards the target leverage at a slower pace. To avoid the direct and indirect costs of increasing financial leverage, such firms try to finance the increase in investment from other sources rather than increasing financial leverage. In firms with excessive financial leverage and low economic uncertainty, an increase in investment did not have much effect on the financial leverage adjustment speed. This could be because if the increase in investment is reliant on financing debt, highly leveraged firms facing low economic uncertainty will deviate from their leverage goals during the investment period and the financial leverage adjustment speed will become negative or close to zero. Ultimately, contrary to expectations, it was observed that in conditions of increased investment, firms with less financial leverage did not have a higher speed of adjusting their financial leverage than those with excessive financial leverage facing low uncertainty. This is probably because in firms with less financial leverage facing low uncertainty, financing investment through debt is not possible and managers use other options such as issuing shares. * Corresponding author
This study delves into auditors' perspectives regarding the catalysts and barriers that impact audit firms' responsiveness to users' needs for audited financial statements. The research adopts a thematic analysis approach, with the participants being partners from audit firms selected through snowball sampling. Data collection was carried out via semi-structured interviews and continued until reaching theoretical saturation. The point of theoretical saturation was reached after conducting 17 interviews. The findings of this study highlight nine factors that foster accountability within audit firms: active engagement of professional associations, the societal position of auditors, mimetic isomorphism, signaling mechanisms, a culture of embracing risk, stakeholder demand for accountability, a suitable legal foundation, structural factors, and proactive audit committee. Conversely, the study discovers six challenges that hinder the establishment of transparency and accountability in audit firms: legal claims, expanding expectations of stakeholders, insufficient financial resources, information leakage, audit quality, and differing perspectives from supervisory bodies. This research offers valuable insights contributing to the theoretical underpinning of accountability for stakeholders within audit firms. This can potentially assist the audit profession and standards-setting bodies in enhancing the legal framework to fortify oversight mechanisms.IntroductionAuditors hold a pivotal role in furnishing transparent information to the market, and the extent of their internal transparency profoundly impacts the perception of those who benefit from the audited reports. A lack of insight into how professional activities are conducted on their behalf can potentially impede the transparency cycle in financial reporting, posing challenges for stakeholders. When the audit process remains opaque and devoid of conveying internal operations to stakeholders, it can result in a misguided evaluation of audit quality.Disseminating information to users of audited financial statements who lack familiarity with the audit process caninfluence their judgments on audit quality. While professional bodies overseeing auditing in various countries addressed public accountability of audit firms and initiated legislative measures in 2008, this matter has not yet been addressed in Iran. Despite the Iranian Association of Certified Public Accountants evaluating firms' statuses, overseeing audit quality, and classifying audit firms accordingly, stakeholders remain unaware of the rationales and intricacies behind the quality control ratings of each firm.Stakeholders require transparency in the audit process, followed by an assessment of audit quality to gauge the quality of financial reporting. Regulatory authorities should establish an appropriate platform to fulfill this valid requirement. The initial stride in this endeavor involves dissecting and elucidating the factors that induce audit firms to be accountable to their stakeholders. Subsequently, audit firms' impediments in upholding accountability must be scrutinized to diminish or mitigate them, allowing regulatory bodies to guide audit firms towards greater accountability. Research Methods The current research has a fundamental purpose, and the data analysis method used was the theme analysis approach. Firstly, an initial framework was created by studying specialized texts on the research topic. Interviews were conducted with audit experts selected through the snowball approach to enrich the collected concepts within the scope of the extracted concepts. The interview process continued until theoretical saturation was reached after completing the fourteenth interview. However, the interview was extended to the seventeenth interview to ensure saturation. Two approaches were used to ensure reliability: test-retest reliability and reliability between two coders. Findings and Conclusions According to experts, several factors were identified as drivers of audit firms toward accountability to stakeholders. These factors include active engagement of professional associations, the social position of auditors from stakeholders' perspective, memetic isomorphism, signaling to stakeholders, a culture of embracing risk, accountability demand of stakeholders, a suitable legal foundation, structural factors, and a proactive audit committee. However, although many professional associations govern the audit profession in Iran, they have not performed any specific activities in this area to create a desire for audit firms to move toward accountability. Additionally, auditors do not have a good position from the point of view of stakeholders, and auditing is primarily done to comply with legal requirements rather than create credibility for financial statements.Experts also mentioned that audit firms tend to copy other firms' behavior, and if an audit firm discloses internal information, others will follow. On the other hand, factors such as legal claims, expanding expectations of stakeholders, insufficient financial resources, information leakage, audit quality, and differences in perspectives of supervisory bodies were identified as hindrances to audit firms responding to stakeholders.In the current situation, the lack of filing lawsuits against auditors is attributed to the lack of knowledge about the professional functioning of auditors. Creating awareness in this field for stakeholders in case of non-alignment with the improvement of audit quality may provide the basis for filing lawsuits against auditors in the future.
The ongoing digitization of the economy presents challenges and opportunities for the auditing profession and requires auditors to adapt to them. This study examines changes in the auditing profession expected by Iranian experts until the next 15 years. It addresses the perception of auditing, the auditor–client relationship, regulations, structural and procedural changes for auditing firms, and the profile of the auditing profession. 27 projections in the form of five sections were extracted through the background study. To screen the auditing changes fuzzy Delphi method was used. Then the changes screened were ranked through the priority assessment questionnaire and the Mabak technique. Experts believe the annual auditing will evolve toward a continuous auditing approach and full (rather than random) auditing. However, audit risks will not disappear. Similar to other areas, a regulatory gap between the new digital business reality and auditing standards will exist. automation will relieve auditors from routine tasks in favor of more complex tasks and massive job losses will occur. Audit addressees will trust automated auditing procedures more than manual ones. They expect a forward-looking approach from auditing. Auditing reports will become less informative for audit addressees in cases like intangible assets and risk management reports. Experts believe that while the current models of audit fees will not be appropriate in the future, the tension between the client and the auditor will not increase. Experts believe that new technologies will not replace the auditor but rather will provide support.IntroductionThe rapid growth of digitalization in today's world has significantly challenged the existing business models and the recruitment of human resources in all industries (Loebbecke & Picot, 2015: 151). Technological advancements have been welcomed by the accounting profession because the profession needs accurate and reliable processes to generate appropriate and timely information for users to make sound decisions. Accordingly, audit firms and auditors are also potentially affected by the development of information technology, especially big data analysis, artificial intelligence, and blockchain technology (Gepp et al., 2018: 107). Big data is a tool for managing and analyzing large data sets that are created by the use of the Internet and other digital technologies. Big data can help model fraud and financial distress and predict future events (Nwachukwu et al., 2021: 21). Artificial intelligence can help automate the mechanical tasks performed by auditors. Auditors can use AI to perform prescriptive, predictive, and diagnostic tasks such as risk assessment and test transactions (Munoko et al., 2020: 212). By using the blockchain, many data, documents, and information needed in the audit can be stored without worrying about destruction. Therefore, auditors seek to understand how to use this technology as a safe and reliable way to digitally record transactions (Barr‐Pulliam et al., 2022: 340). These digital developments can affect the audit industry. Auditors and their interested groups need to know how this effect is. This study examines the expected changes in the auditing profession from the perspective of auditing experts in Iran for the next 15 years. For this purpose, an exploratory scenario was chosen instead of a depth scenario and the focus was on three technologies: artificial intelligence, big data, and blockchain. The expected changes in the auditing profession have been examined in the form of 27 questions in five sections: the perception of auditing, the auditor–client relationship, regulations, structural and procedural changes for auditing firms, and the profile of the auditing profession. Methods & MaterialUsing the fuzzy Delphi method, the current study has chosen an exploratory (broad) scenario instead of a deep scenario and focused on three technologies: artificial intelligence, big data, and blockchain. A broad Delphi approach eliminates the details by considering many specific aspects of the audit. Research is practical in terms of purpose. To conduct the research, first by studying the literature and the background of the research, 27 propositions for predicting the future of auditing if digital technologies are used in five sections: changing the understanding of audit audiences, changing the relationship between the auditor and the employer, changing legislation, structural changes and audit procedures, and changes in the characteristics of the profession were extracted. To analyze the findings more precisely, all propositions were designed as negative, which means that agreeing with each proposition will mean the poor state of the auditing profession and auditors in the next 15 years. Then, by designing a questionnaire, each statement was questioned. Fuzzy Delphi is a method for sifting indicators and factors, which uses numbers and fuzzy calculations to represent the views of experts. In this research, the five-point Likert spectrum, which is one of the common fuzzy spectrums, has been used. Using the purposeful sampling method, Delphi group members were selected. Finally, 26 questionnaires were used for data analysis. After removing the propositions that de-fuzzy value is less than the threshold (0.7), the Mabak method has been used to rank and extract the most probable propositions. FindingsExperts expect that reporting appropriate and comparable figures for intangible assets on the balance sheet will become increasingly difficult, resulting in less information for the audience of the audit report. With the adoption of digital technologies, audit report audiences will have more confidence in automated auditing methods than manual methods. Research experts have opposed the obsolescence of auditors' judgment in the digital age. Wishful thinking can be one of the reasons for opposing this proposition. Experts have agreed with the widening of the expectation gap regarding forward-looking risk statements in management reports. According to them, the audience of audit reports expects the dominance of a proactive and forward-looking approach from audit compared to the current passive and retrospective approach. Experts agree that automation is pushing current fee models for audit services. They believe that the transparency resulting from the use of digital technologies will not lead to an increase in tension between the auditor and the employer. Blockchain experts believe that there is no guarantee for transactions that are made in the real world and recorded on the blockchain. Transactions may be fraudulent, illegal, or unauthorized. Therefore, blockchain will not be a substitute for auditing. While agreeing to reduce the duration of contact between the auditor and the employer, the experts disagreed with reducing the importance of the relationship between the auditor and the employer. They believe there will be a significant regulatory gap between the new digital business reality and future auditing standards. Experts do not believe new auditing standards can be set by artificial intelligence instead of a human regulatory authority. They don't see AI progressing fast enough to make this prediction realistic. Experts expect that auditing standards in the future will continue to provide margins of discretion and freedom of action for auditors. The opposite of this view is that auditors' freedom of action will be lost due to full disclosure and transparency in all transactions. According to experts, there will be no need for separate standardization for small and large audit institutions in the future. Furthermore, professional skepticism will continue to be important as a professional qualification. Experts expect digitization to reduce the workload for simple audit tasks and give auditors more time to focus on more complex tasks. The opinion of experts is against changing the profile of senior auditors from classic auditing to consulting. Experts believe that annual audits are likely to be replaced by continuous or even real-time audits. This is acceptable given the advanced technology and capital market demand for faster and more reliable financial reports. Experts have opposed the elimination of small and medium audit firms in the digital age. Meanwhile, it is expected that only large auditors can make the necessary investment in digital technologies. They expect that artificial intelligence can provide auditors with a variety of tools in different areas and facilitate their decision-making. Full audit instead of audit based on sampling will be the rule of the audit profession, but audit risks will not be eliminated. This means emphasizing the human role in the audit process. Experts expect that in the digital era, along with specific auditing knowledge and skills, information technology knowledge is also of particular importance. They do not believe that exam requirements will reduce graduate interest in the field. Probably, the dynamism of the field and its synchronization with technological changes have been factors influencing the judgment of experts. According to experts, many jobs in the accounting profession will disappear in the digital age. The need for the physical presence of auditors in the workplace will be reduced and things will be done remotely, but this will not lead to disruption of their work-life balance. Conclusion & ResultsThe present research studies the future of auditing in Iran in the digital era in the next 15 years. For this purpose, by designing 27 predictive propositions in the form of a wide scenario, the future of auditing was studied in the form of five sections: changes in the understanding of audit audiences, changes in auditor-employer relationships, legislative changes, structural changes and audit procedures, and the characteristics of the audit profession. Forecasts are often formulated negatively; in this case, the rejection of any forecast statement indicates a positive outlook toward the future of auditing. After screening the propositions using the fuzzy Delphi method and removing 14 propositions, the remaining 13 propositions were ranked using the Mabak decision-making method. Mabak's ranking shows that, according to the opinion of experts, in the next 15 years, full audit and continuous auditing will be the rule of the auditing profession. In these years, there will be a legislative gap between the real conditions of digital business and auditing standards, and the standards will not be in sync with the speed of technology development. While automation will free auditors from routine and repetitive tasks to perform more complex and value-added tasks, it will challenge the current models of determining audit fees. According to experts, in the next 15 years, audit audiences will have more trust in automatic audit methods and procedures than manual and non-automatic procedures, and they expect auditors to adopt a forward-looking approach. Along with the loss of many jobs in the auditing profession in Iran, the physical presence of auditors in the workplace and the duration of contact between the auditor and the employer will decrease. Experts believe that in the next 15 years, artificial intelligence will help auditors make audit decisions with greater freedom of action (depending on the type of tool). In this situation, auditors will need expertise in information technology and data at the expense of simpler auditing skills. Experts believe that the information content of the auditors' report will be reduced for the audience in areas such as the assessment of intangible assets and risk management reports. The findings show that new technologies in Iran will not replace auditors, but will help them. Tiberius and Hirth (2019) also showed that according to auditors in Germany, digital technologies will not be a big threat to the auditing profession. The results contradict Frey and Osborne's (2017) prediction of the accounting profession becoming obsolete in the digital age, which similarly affects auditors. * Corresponding author
Managers can maximize shareholders' wealth by managing variables in the financial structure (such as capital structure, dividend, and investment). Using corporate governance mechanisms, shareholders try to guide managers in this direction. The sample of this research is the statistical tests in past experimental studies that experimentally tested the research hypotheses. In this research, with the meta-analysis approach (in seven stages), the influence of the aforementioned variables on corporate governance and their effect on financial performance is tested. Due to the presence of three intermediate variables, three hypotheses about the effect of corporate governance on the mentioned variables and three hypotheses about the effect of intermediate variables on financial performance, and one hypothesis on the direct effect of corporate governance on financial performance were designed and 64 studies including a total of 260 effect size (r type) that their publication dates were between 1993 and 2019 were meta-analyzed. In the groups of the sample where the effect sizes were divergent, the random effects method, and for the convergent cases, the fixed effects method was used to calculate the cumulative effect size. Based on the results, corporate governance affects financial performance, capital structure, dividends, and investment. In addition, all three variables of capital structure, dividend, and investment have a significant influence on financial performance. For each hypothesis, after determining the size of the joint effect, a robustness test has been performed and analyzed on the results.IntroductionIn many past studies, the impact of corporate governance on the company's financial performance has been measured directly (Che et al., 2008). It is expected that corporate governance will lead to the improvement of financial performance not directly but through the impact on some structural variables of the company. If these variables do not have a favorable impact on corporate governance or on performance, the impact of corporate governance on performance will be distorted. In this research, the effect of corporate governance on mediating variables and the effect of mediating variables on financial performance are tested with a meta-analysis approach. After meta-analyzing about 110 studies searched with the keywords of corporate governance and financial performance, the mediating variables identified are capital structure (Hussainey and Aljifri, 2012), dividend (Elmagrhi, et al. 2017), and investment (Sharma, 2012). Optimal capital structure as a structure for which the wealth of shareholders is maximized is one of the mediators of corporate governance and performance. While the dividend is one of the important factors studied by previous studies in maximizing shareholders' wealth. Opportunistic managers use the extra cash for their self-serving. With the effective implementation of corporate governance mechanisms, dividend policy works to overcome agency problems (Ogden, et al., 2003). Does corporate governance influence management actions? Do companies with different degrees of governance experience different managerial practices? Do management practices facilitate the achievement of the goal of maximizing shareholders` wealth? And in general, has the development of corporate governance directly or indirectly affected the company's financial performance? These are the questions that the authors were motivated to find answer to solve the functional paradox of corporate governance and performance. Methods & MaterialThe meta-analysis of this research has been implemented in seven stages. In the first stage, corporate governance as an independent variable, financial performance as a dependent variable, and capital structure, dividend, and investment as intermediate variables were defined. In the second stage, three main steps, including determining keywords, determining databases, and searching for studies, were implemented. Indexing databases include Science Direct, Emerald, Google Scholar, SSRN, ResearchGate, Jstor, and Semantic Scholar and keywords include “Corporate governance, Board of directors, Board independence, Ownership, Concentration, Institutional ownership, Performance, Financial performance, ROE, ROS, ROA, Tobin’s Q, EVA, Return on equity, Return on Sales, Return on assets, Economic value added, Capital expenditure, Corporate investment, Positive NPV projects, Dividend, DPS, Capital structure, Debt ratio, and Leverage ratio”. In the third stage, after applying the conditions: 1) the subject of the research is following one of the hypotheses of this meta-analysis, 2) the information necessary to calculate the effect size is reported, and 3) the study is correlational. 64 published studies including 260 empirical tests (the sample of this research) were meta-analyzed between 1993 and 2019. In the fourth stage, general information, information related to the effect size, and information necessary for the reliability test were extracted, sorted in the form of an Excel spreadsheet, and entered into the CMA software for the next steps. In the fifth step, the effect size was calculated for each member of the sample (each test). In cases where the correlation coefficient between the independent and dependent variable has been calculated, the correlation coefficient has been recorded as the r effect size. In cases where the regression analysis method was used, the t statistic corresponding to each regression coefficient was converted into the effect size r with the following formula (Rosenthal, 2001).where “t” is the value of the test statistic, and n is the number of observations in the empirical test in the field study. In the sixth step, the cumulative effect size was calculated for each hypothesis. After testing the hypotheses using the significance of the cumulative effect size, it has been tried to check the robustness of the results by changing the research conditions. FindingsIn all hypotheses, the common effect size is divergent, that is, it is related to a group of different effect sizes with high deviation, and the random effects method is used for calculating the cumulative effect size. The results indicate the rejection of the null hypothesis related to all hypotheses. In other words, the effect of corporate governance on financial performance and all three mediating variables and the effect of all three mediating variables on financial performance are confirmed. Therefore, based on the meta-analysis of past studies, capital structure, dividends, and investment play a mediating role between corporate governance and financial performance. To robustness check the results, the answer to this question is considered: Does the relationship between corporate governance and financial performance change with changing the research conditions? The conditions that are the basis of the robustness check include the country's development, the corporate governance index, and the time of the study. That is, it is checked that when the tests are separated based on the development of the countries, the time of the empirical study, and the indicators of corporate governance, do the results remain the same? The robustness check results show that in developed countries the results of hypothesis 1 remain stable, but the impact of investment and dividends on financial performance is not. The time of empirical studies was categorized into three subperiods (2005-2009), (2010-2014), and (2015-2019). The direct relationship between corporate governance and financial performance and capital structure, even though it was positive and significant in the whole sample and the past, in recent years, has become insignificant. The impact of dividends and investment on financial performance and the impact of corporate governance on investment in recent years, i.e., from 2015 to 2019, has been positive and significant. In other words, these five relationships have changed from a negative state in the past years to a significant positive state in recent years. Conclusions and ResultsDuring the first hypothesis test, the existence of a positive relationship between corporate governance and financial performance and the repetition of this relationship in developing and developed countries have shown the success of shareholders in directing management and governance policies to protect their wealth. This effect on the level of financial performance indicators due to the positive and significant impact on asset return, equity return, and Q-tubin shows that the corporate governance system has been able to align the accounting and market indicators of financial performance. Since the independence of the board of directors and the audit committee has the greatest impact on financial performance (Buallay, et al., 2017; Kajola, 2008; Merendino & Melville, 2019), it is appropriate for shareholders to try to ensure that the board of directors is not empty of independent directors and that internal audit and a strong internal control system are under the supervision of independent members of the board. The positive relationship between corporate governance and capital structure, and dividends, as well as its significant relationship with financial performance (especially return on equity and return on assets) and the strengthening of both relationships in the last five years, allow this index to be one of the mediators of performance. Shareholders have managed to direct the company's financial policies to improve financial performance through corporate governance. This and the effective role of many corporate governance indicators show the effectiveness of the corporate governance system in this regard. Investment is the last mediating variable between corporate governance and financial performance. The positive relationship of this variable with corporate governance and financial performance (especially return on assets and Q-Tobin) has made it accepted as one of the mediators of these two variables in this research. It means that the shareholders have been able to control the investment policies of the management and improve the financial performance criteria through that.
The occurrence of mistakes in accounting is inevitable and factors such as diversity and complexity of economic issues, high volume of work, fatigue, etc. increase the possibility of mistakes. Also, due to the continuous changes that take place in the economic, social, etc. conditions, it may be necessary to make changes in accounting principles and methods in order to harmonize the business unit with the new conditions, all of which result in the re-presentation of financial statements. A subject that has received a lot of attention as a result of reporting scandals such as Enron and... The purpose of this research is to present the expanded model of Banish in companies admitted to the Tehran Stock Exchange between 2009 and 2019. Also, the data of 265 companies were used using Benish model and logit regression and genetic algorithm were also used to estimate the improvement of the prediction model. The results of the research indicate that, based on the confusion matrix, among the predictive models for re-presentation of financial statements, the accuracy and efficiency of the improved Benish model with the genetic algorithm has a total prediction accuracy of 73.21%, which has the highest predictive power in The comparison with the original Benish model and the presented model was with logit regression.
Considering the important role of the exchange industry in the optimal allocation of resources and economic growth, as well as promoting a culture of attention to sustainability issues, the purpose of this study is to provide a comprehensive framework of material sustainability criteria in the exchange industry for integration into strategies, performance measurement, evaluation and reporting. In order to identify material sustainability criteria in the Iranian exchange industry, the findings of Ahmadi et al research (1401) which include 33 criteria and 352 sub-criteria have been used as a basis. In order to formulate a local framework, the participation of 21 industry experts was used to modify the criteria identified in the Ahmadi et al, according to the culture of Iran. Finally, after finalizing sustainability framework of the Iranian exchange industry, in order to evaluate materiality and prioritize the main criteria, the Fuzzy AHP method has been used. Considering the extensive effects of exchanges from the perspective of financing economic enterprises and the government (through transaction fee tax and issuing bonds), the findings of this study indicate the priority of economic dimension over other sustainability dimensions. Macroeconomics, government and other regulators and trust and confidence have the greatest relative importance among all other criteria. On the other hand, due to the low emissions of exchanges, the relative importance of environment dimension criteria is less than other dimensions in the industry. IntroductionThe number of countries that have organized capital markets has increased greatly in recent decades and investors' interest in capital markets have experienced unprecedented growth in recent years. As a result of the increased attention of society towards investing in capital markets, their awareness of sustainability issues has also increased. As a result, in such a situation, the necessity of proper management and sustainable performance of exchanges and issuing sustainability reports is more important than before. Sustainability reporting deals with how a company can report its sustainability performance in the form of a formal report, taking into account its responsibilities regarding positive and negative economic, social and environmental impacts (Hahn & Michael, 2013).In the current situation of Iranian exchanges and the volatility of stock prices and indices, the attention of a wide range of domestic stakeholders has been drawn to the performance of the exchanges. Therefore in the current situation, it is very important to achieve sustainable performance and be responsible to stakeholders. Therefore, the aim of this study is to answer the question that paying attention to what factors will guarantee the sustainable performance of exchanges and as a result economic development in the long term. Methods and material In order to identify the important sustainability criteria of the Iranian exchange industry in the present study, the results of Ahmadi et al were used as a basis. They presented a comprehensive international framework of sustainability. In order to confirm and modify their proposed model in domestic exchanges, the method of interviewing 21 experts has been used. Then, the fuzzy AHP method has been used to prioritize the sustainability criteria. The results of this process is providing a framework of the most important sustainability issues, considering the priority coefficients of each criterion.The paradigm of the current research is an interpretive paradigm, and in order to extract the sustainability criteria, an inductive approach has been used. From the perspective of research strategy, this study can be classified in the field of documentary and survey studies. Also, due to the use of quantitative and qualitative approaches to answer the research questions, this study used mixed method. On the other hand, due to the fact that this study was conducted at a specific point in time, this study is classified as a cross-sectional study. FindingsBased on the research findings, the most important sustainability criteria of the exchange industry can be classified in four economic, social, environmental, and corporate governance dimensions. After summarizing Ahmadi et al. (under publication) findings with the results of the interview coding process regarding the most important sustainability criteria of the Iranian exchange industry, 6 main criteria under the environmental dimension, 6 criteria under the social dimension, 11 criteria under the economic dimension and 13 criteria under the corporate governance dimension has been classified. Based on the findings of this study, the criteria of the economic dimension are the most important and the criteria of the environmental dimension are the least important in the Iranian exchange industry. Table 1: The relative and ultimate priority of sustainability framework criteria of Iran's exchange industryDimensionCriteriaRelative Importance of CriteriaUltimate Importance of CriteriaRelative Priority of CriteriaUltimate Priority of CriteriaEconomicMacroeconomics0.1400.07211EconomicGovernment and Other Regulators0.1290.06622EconomicTrust and Confidence0.1280.06533EconomicOperational Excellence0.1060.05444EconomicDiversified Products and Services0.0980.05055EconomicInnovation and Technology0.0930.04866EconomicListed Companies0.0830.04277Corporate GovernanceBoard of Directors0.1320.04018EconomicTransparency0.0740.03889Corporate GovernanceSelf-Regulation and Independence0.1250.037210EconomicDisclosure and Reporting0.0720.037911Corporate GovernanceMarket Regulation and Surveillance0.1190.036312EconomicFinancial and Economic Performance0.0670.0341013Corporate GovernanceRisk Management0.1060.032414Corporate GovernanceFinancial Crimes0.1050.031515SocialHuman Capital0.2250.027116Corporate GovernanceResponsibility and Accountability0.0840.025617SocialEducation and Training0.1850.022218SocialSupport for Startups and SMEs0.1830.022319SocialHuman Rights0.1780.022420Corporate GovernanceConflict of Interest Management0.0700.021721Corporate GovernanceStakeholder Management0.0660.020822SocialDiversity and Equality0.1630.020523Corporate GovernanceAudit and Assurance0.0610.018924Corporate GovernanceEthics0.0510.0151025EnvironmentalEnergy and Resource Management0.1960.014126EnvironmentalAwareness Raising and Participation in The Environment0.1930.013227EnvironmentalDesigning Environmental Instruments0.1790.012328EnvironmentalEnvironmental Requirements for Listing0.1780.012429Corporate GovernanceValues and Culture0.0390.0121130Corporate GovernanceVision0.0380.0111231EnvironmentalCarbon Footprint and Greenhouse Gas Emissions0.1500.010532SocialImproving the Living Standards0.0660.008633EnvironmentalCompliance with Environmental Rules0.1030.007634EconomicSupply Chain Management0.0110.0051135Corporate GovernanceWhistleblowing0.0040.0011336Total 1 Conclusion & ResultsAccording to the survey conducted by Wfe in 2016, the most important sustainability issues for exchanges include ethics and corruption, board of directors composition and remuneration, health and safety, risk management, labor standards, water use and recycling, pollution (air, water and waste), climate change and energy, supply chain, human rights and diversity. The findings of the survey conducted by Wfe are limited to 11 criteria, while in the present study a comprehensive approach has been used to identify the most important sustainability criteria and prioritize them. Findings include 36 main criteria and include all the provided criteria in the Wfe survey. The findings of this study will help exchanges to identify the most important issues that help to create shared value. The findings of this study can be used to develop sustainable strategies as well as the findings can also help providers of sustainability reports to choose the most important sustainability issues to report. In addition, due to the similarity of the mechanisms of the financial industry to the exchange industry, financial industry professionals can also use the findings of this research in their sustainability decisions.
The quality of financial reports and reported profits is very important for investors, legislators, researchers, etc. On the other hand, company managers use a variety of profit management methods to increase the stock price and maintain a high stock value. In general, some managers have enough incentives for a high valuation of the company's shares. In this way, one of the methods that can be applied to prevent the decrease in stock prices is the use of discretionary accruals. In this regard, agency costs are considered one of the determining factors of accruals in companies, and the ownership structure affects the levels of agency costs, also. Based on this, in current research, the effect of the ownership structure on the magnitude of discretionary accruals in companies with high valuations has been investigated. For this purpose, the data of 160 companies listed on the Tehran Stock Exchange during the years 2010 to 2019 have been collected. The research results show that there is a direct relationship between the high valuation of the company and the magnitude of discretionary accruals. Also, the results show that the magnitude of discretionary accruals increases in the initial periods of high valuation and decreases in the following periods. In addition, managers of state-owned companies do not have the necessary motivation to use discretionary accruals in line with the company's high valuation. In short, the results of this research help to understand the effect of the ownership structure on the reporting behavior of managers in the Iranian capital market.IntroductionThe quality of financial reports and reported profits is very important for investors, legislators, and researchers. The type of ownership and management resulting from it can also affect the quality of information and financial performance of companies. Company managers use a variety of profit management methods to increase the stock price and maintain its high value. This issue continues until the company's stock price exceeds its economic value, which is called high stock valuation. In fact, highly valued companies lack the ability to achieve the expected level of performance commensurate with the stock price. For this purpose, the managers of such companies turn to profit management by using bold accounting procedures to cover this weak performance. In this regard, one of the usual profit management tools is the use of discretionary accruals. Therefore, it is expected that the magnitude of discretionary accruals in companies with high stock valuation is more than in other companies. Also, in this context, Badercher concluded that the level of abnormal (optional) accruals changes with the increase of the high valuation period. In particular, to keep the stock price (value) high, managers tend to use abnormal (discretionary) accruals before using real abnormal transactions (or in other words, real profit management). Based on this, the first and second hypotheses have been formulated as follows:First hypothesis: the level of discretionary accruals of companies with high valuation is higher than other companies.Second hypothesis: in companies with a high valuation, as the valuation period lengthens (from one period to three periods), the magnitude of accruals increases at first and then decreases.On the other hand, in relation to how state ownership affects the relationship between permanent (sustainable) high valuation and the magnitude of accruals, managers of state-owned companies compared to managers of private companies, have a less monetary incentive to keep the stock price (value) high and also there has been less supervision of the CEOs in public companies. Therefore, despite the low motivation of the managers of public companies to act on profit management, weaker monitoring of such managers may increase their motivation and ability to manage profits. Based on this, the third hypothesis is as follows:The third hypothesis: the type of ownership has a significant effect on the relationship between high valuation and discretionary accruals.Conducting this research helps to understand the effect of ownership structure on the reporting behavior of managers in Iran`s capital market and also the results of this research also help to understand the role of political background in the quality of financial reporting of companies. Research MethodThe research is practical in terms of purpose and descriptive-correlative in terms of method. which has been done using the data of the financial statements of the companies listed on the Tehran Stock Exchange. For this purpose, the data of 160 companies listed on the Tehran Stock Exchange from 2010 to 2019 have been collected. To estimate discretionary accruals based on the performance index model of Kothari et al., the model proposed by Dicho and Dicho and modified by McNichols has been used also. In this research, if the abnormal return of the company last year is among the top decile of the sample, the number 1 is assigned to the variable HV, and otherwise it is assigned the number 0, and the P/E ratio is also used to identify overvalued companies.To test the first hypothesis of the research, a regression model was used according to the following relationship:To test the second hypothesis, the following experimental model has been used:To test the third hypothesis, the following experimental model has been used: Findings and SuggestionsThe results of the first hypothesis showed that the effect of different high valuation criteria on different indicators of discretionary accruals was positive and significant.The results of the second hypothesis showed that among the different periods of high valuation (from one to three periods), the effect of different criteria of high valuation in one and two periods on various indicators of discretionary accruals was positive and significant. This is despite the fact that the effect of different criteria of high valuation in three periods on various indices of discretionary accruals (except for the effect of high valuation in three periods based on the abnormal return criterion on the magnitude of discretionary accruals based on the Dicho and Dicho indices) was insignificant. Is. The results related to the weakening of the effect of the high valuation of the company (with the lengthening of the high valuation period) on the magnitude of discretionary accruals confirm that with the lengthening of the high valuation period, the cost and difficulty of managing accruals also increases.The results of the third hypothesis showed that among the different indicators of discretionary accruals as well as various criteria of high valuation, only the interactive effect of high valuation according to the criterion of abnormal return in the type of ownership on discretionary accruals according to the model of Kothari et al. was negative and significant. This is despite the fact that in relation to other regression models, the relationship between high valuation and discretionary accruals was independent of the type of ownership. Based on this, it can be concluded that the effect of ownership type on the relationship between high valuation and discretionary accruals was significant only according to Kothari et al.'s discretionary accruals model and high valuation of abnormal returns. The negative and significant effect of the interactive effect of high valuation according to the abnormal return criterion in the type of ownership on discretionary accruals according to the model of Kothari et al. is in line with this view that managers of public companies have fewer shares and stock options than managers of private companies and have less monetary incentive to generate abnormal stock returns as well as the level of discretionary accruals (earnings management).It is suggested that the users of the information of listed companies and especially financial analysts and potential shareholders in evaluating the quality of profit and potential performance of the mentioned companies (companies with high valuation) and also for future investment in the mentioned companies, due to the high risk of investing in such companies, be more careful. Considering the negative and significant effect of the interactive effect of high valuation according to the abnormal return criterion in the type of ownership on discretionary accruals according to Kothari et al.'s model, it seems that managers of public companies have a less monetary incentive to create abnormal returns as well as the level of discretionary accruals (earnings management). So; It is suggested that the companies that are responsible for ranking companies should consider their type of ownership.
