The Effect of Firm Size and Growth Opportunity on Accounting Discretion and its Relationship with Future Stock Return (Management Opportunism Test)

Accounting flexibility has raised concern about management opportunism among owners. Accounting discretion, as an information system controlled by directors, intensifies opportunism and agency problem. Regarding the firm situation, however, directors are likely to employ accounting discretion so that its consequences are compatible with shareholders’ interests, or at least do not oppose them. Firm size and growth opportunity are of great importance for its management, depending on the way it uses accounting discretion. The present study aims to offer a model indicating the relationship between firm size and growth opportunity and accounting discretion, and its effect on stock return as a distinctive characteristic of firm performance and consequently, test the management opportunism. This research employs an applied and correlational method. The results respectively point to a positively and negatively significant relationship between firm size and firm’s growth opportunity, and accounting discretion while the relationship between accounting discretion resulting from recent variables and stock return does not point to the opportunism of the directors. In general, the results indicated that there is no significant difference between predicted accounting discretion and projected future stock returns which indicates that there is a mismanagement in creating opportunities among the firms under study

The Effect of Firm Size and Growth Opportunity on Accounting Discretion and its Relationship with Future Stock Return (Management Opportunism Test)

Accounting flexibility has raised concern about management opportunism among owners. Accounting discretion, as an information system controlled by directors, intensifies opportunism and agency problem. Regarding the firm situation, however, directors are likely to employ accounting discretion so that its consequences are compatible with shareholders’ interests, or at least do not oppose them. Firm size and growth opportunity are of great importance for its management, depending on the way it uses accounting discretion. The present study aims to offer a model indicating the relationship between firm size and growth opportunity and accounting discretion, and its effect on stock return as a distinctive characteristic of firm performance and consequently, test the management opportunism. This research employs an applied and correlational method. The results respectively point to a positively and negatively significant relationship between firm size and firm’s growth opportunity, and accounting discretion while the relationship between accounting discretion resulting from recent variables and stock return does not point to the opportunism of the directors. In general, the results indicated that there is no significant difference between predicted accounting discretion and projected future stock returns which indicates that there is a mismanagement in creating opportunities among the firms under study

A study on relationship between lower of cost or market and tax

Measuring the value of inventory and cashable assets is one of the issues, which influences on total revenue as well as the amount of tax paid to government. This paper presents an empirical investigation to study the relationship between lower of cost or market (LCM) and tax on 708 selected firms listed on Tehran Stock Exchange over the period 2008-2011. The study uses some statistical tests and determines that the tax can be affected by different methods used to calculate the inventory. In other words, The study applies regression analysis as well as Pearson correlation test and confirms that LCM method influences positively on Tax. This helps revenue agencies pay special attention to various methods used in official financial reports

MISUNDERSTANDING OF ROLE AND POSITION OF ACCOUNTING STANDARD SETTING AUTHORITIES TO REDUCE INFORMATION ASYMMETRY: EMPIRICAL EVIDENCE OF IRAN

Purpose - Critical role of accounting and financial reporting is providing useful information for different and entitled users to help them in making economical decisions. While repeatedly it is stressed that the quality of financial information is a function of both the quality of accounting standards and the regulatory enforcement, it is vital that standard setting authorities bodies to have independence and suitable enforcement power to guarantee their issued standards implementation with accountants in preparing and releasing accounting information, where their enacting mechanisms differ significantly across countries, even being non-existent in some countries. This study seeks with aid of Abdolmohammadi’s enforcement powers classification of standards (2002) including: Reward, Legitimate, Referent, Expert and Coercive Powers, determine from perspective of respondents and current condition of accounting profession, which powers are dominant, besides it also tends to evaluate past performance of Iranian accounting regulatory. Design/methodology/approach - in order to test two main hypotheses of the study, a suitable questionnaire was used with some questions about current condition of enforcement ways of accounting standards in Iran. 281 questionnaires distributed among accounting related financial society members including: accountants, auditors, bank specialists, and accounting students as agents of financial society. After assuring of its validity and reliability, collected data tested by Kruskal-Wallis, Friedman, and T-test statistical methods. Findings - The results showed that among various enforcement accounting standards powers respondents believe coercive power is more apparent and main motivation for providing accounting formal reports in accordance to GAAP come from managers’ concern of blocking their companies stock dealing by Tehran Stock Exchange organization, besides they accept standard setting professional abilities. Also respondents believe that Iran’s Audit organization in standard setting process has had behaved unfairly and didn’t pay attention to regulate accounting of governmental and Not-For-Profits parts as equal as large private corporation accounting. Research limitation/implication - A key technical result is that the five original powers of enforcement accounting standards don’t have equal weight and influence on current accounting environment of Iran and to enhance disclosure quality and reduce information asymmetry, some work must been done to more highlight powers with positive and professional perspective. Practical implications - The paper will be of interest to standards setting authority bodies’ when regulating accounting information releasing process to achieve high level of market efficiency and also to academics’ investigating the reliability and value of current standard setting condition. Originality value - The paper reports an original application of accounting standard enforcement origins as a determinant level of dominance financial wisdom in financial society of Iran.Accounting standard, enforcement powers, Information asymmetry, financial wisdom, and fairness in standard setting.

Evaluating the effects of ERP systems on performance and management accounting in organizations

Coordination of operation and information in order to elevate the efficiency is one of the processes in organizations and often has been accompanied with resorting to IT in a large scale. Organizations have implemented Enterprise Resource Planning (ERP) systems due to problems posed by separated systems. The aim of this research is to study whether ERP systems cause increasing performance efficiency and changing management practices in organization. In addition, the role of management accountants have been examined to find out that whether they are gaining new roles within organization and whether their work content has changed after the ERP implementation. The research is conducted with a survey questionnaire. The sample consists of 50 knowledgeable persons in organizations that have implemented ERP systems. Results indicated that ERP systems have had an impact on organization performance, accountants and management accounting. These systems provide more real-time and accurate information to budgets and techniques, and organizations have also introduced advanced management accounting techniques after the implementation. As regards the time use of accountants, the results exhibit that the respondents have used less time on their routine work after the ERP implementation. This extra time is devoted on interpreting data and performance evaluation and other tasks. Finally, accountants in the study consider that the implementation of ERP systems has made skills such as, IT skills and knowledge of other functional areas more important

Evaluating the effects of ERP systems on performance and management accounting in organizations

Coordination of operation and information in order to elevate the efficiency is one of the processes in organizations and often has been accompanied with resorting to IT in a large scale. Organizations have implemented Enterprise Resource Planning (ERP) systems due to problems posed by separated systems. The aim of this research is to study whether ERP systems cause increasing performance efficiency and changing management practices in organization. In addition, the role of management accountants have been examined to find out that whether they are gaining new roles within organization and whether their work content has changed after the ERP implementation. The research is conducted with a survey questionnaire. The sample consists of 50 knowledgeable persons in organizations that have implemented ERP systems. Results indicated that ERP systems have had an impact on organization performance, accountants and management accounting. These systems provide more real-time and accurate information to budgets and techniques, and organizations have also introduced advanced management accounting techniques after the implementation. As regards the time use of accountants, the results exhibit that the respondents have used less time on their routine work after the ERP implementation. This extra time is devoted on interpreting data and performance evaluation and other tasks. Finally, accountants in the study consider that the implementation of ERP systems has made skills such as, IT skills and knowledge of other functional areas more important

Evaluating the effects of ERP systems on performance and management accounting in organizations

Coordination of operation and information in order to elevate the efficiency is one of the processes in organizations and often has been accompanied with resorting to IT in a large scale. Organizations have implemented Enterprise Resource Planning (ERP) systems due to problems posed by separated systems. The aim of this research is to study whether ERP systems cause increasing performance efficiency and changing management practices in organization. In addition, the role of management accountants have been examined to find out that whether they are gaining new roles within organization and whether their work content has changed after the ERP implementation. The research is conducted with a survey questionnaire. The sample consists of 50 knowledgeable persons in organizations that have implemented ERP systems. Results indicated that ERP systems have had an impact on organization performance, accountants and management accounting. These systems provide more real-time and accurate information to budgets and techniques, and organizations have also introduced advanced management accounting techniques after the implementation. As regards the time use of accountants, the results exhibit that the respondents have used less time on their routine work after the ERP implementation. This extra time is devoted on interpreting data and performance evaluation and other tasks. Finally, accountants in the study consider that the implementation of ERP systems has made skills such as, IT skills and knowledge of other functional areas more important

Studying Bankruptcy of Companies Falling into the Liquidity Trap in Tehran Stock Exchange

Improper working capital policies may put companies in a situation where they may have difficulty securing their cash resources; in the financial sector, this is called a liquidity trap. The liquidity trap implies the inability of companies to provide cash resources due to inappropriate working capital policies. Theoretically speaking, companies falling into the liquidity trap have difficulty in fulfilling their obligations and paying off debts, due to applying proper liquidity policies; resulting from lack of cash flows or cash outflows, due to the internal or external factors, they are subject to financial limitations and ultimately bankruptcy. The purpose of this study is to investigate whether the companies listed in the Tehran Stock Exchange that have been fallen in the liquidity trap, eventually go bankrupt; using the data of 206 companies in the period of 2008-2017 and based on the liquidity trap prediction model of Vakili Fard et al., the financial limitation prediction models of Kaplan and Zingales, Witedo and modified Kaplan and Zingales, as well as modified Altman bankruptcy prediction models and genetic algorithm, we examined this hypothesis. Confirming the research hypothesis, it was concluded that companies with liquidity trap go bankrupt, unless they reform or change their working capital policies

Social and Environmental Accounting in IRAN

ABSTRACT The aim of this research is the study of the relationship between the elements of corporate social and environmental reporting and their annual financial reporting quality in IRAN. Since social and environmental accounting in Iran has not been used in an organized and formal form, we intend to study the effect of this type of reporting factors, i.e. to disclose human resource information, community involvements, and environmental issues on accepted firms' annual reporting quality in stock exchange in Iran. Accordingly, three hypotheses have been designed as the research hypotheses and a questionnaire was used to collect data. 235 audit firms of Iranian Association of Certified Public Accountants (IACPA) were chosen as domain of study and the time scope has been in the spring and summer of 2012. One-sample T-test has been used to test hypotheses and provide a model for quality; also we used MannWhitney-Wilcoxon test to confirm its results. Bartlett test and principal component analyze have been used to provide quality model. The results show that there is a positive and significant relationship between the disclosure of the above three components and annual reporting quality. The amount of these variables impact based on specified pattern is 0.915 for social involvements, 0.864 for environmental issues and 0.818 for human resource information disclosure