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1 – 10 of 16Abdollah Azad, Mahdi Salehi and Mahmoud Lari Dashtbayaz
Auditors should realize misstatements and communicate to managers for adjustments. Managers usually modify the misstatements, but they have motivations, like earnings management…
Abstract
Purpose
Auditors should realize misstatements and communicate to managers for adjustments. Managers usually modify the misstatements, but they have motivations, like earnings management, for not altering the misstatements. The auditor expects to identify the misstatements’ earnings management, inform the managers and reduce earnings management by proposing adjustments. This study aims to determine whether identified and adjusted misstatements cause a decline in earnings management. Is the increase in the materiality of identified and adjusted misstatements associated with a reduction in earnings management?
Design/methodology/approach
The identified and adjusted misstatements are obtained from the difference between nonaudited financial statements and audited ones. Earnings management is computed using the adjusted Jones model, and the quantitative materiality threshold has also been calculated based on the Iranian auditors’ guidelines. These variables and other required information were gathered for 159 listed firms on the Tehran Stock Exchange during 2014–2019 and examined by the regression models.
Findings
The results show a negative relationship between identified and modified misstatements of total assets and earnings management and a positive and significant relationship between identified and adjusted misstatements of total liabilities and earnings management. However, the positive relationship between identified and adjusted misstatements of net income with earnings management is not significant. Besides, the relationship between the materiality difference and an absolute value of identified and adjusted misstatements (materiality minus the absolute value of misstatements) of total assets and earnings management is positive and significant, but the negative association between materiality difference and the absolute value of identified and adjusted misstatements of total assets and earnings management is not significant. The relationship between materiality difference and the absolute value of identified and adjusted net income and earnings management misstatements is negative and significant. These results indicate that the more material the identified and adjusted misstatements, the less earnings management.
Research limitations/implications
The difference between nonaudited and audited financial statements represents identified and adjusted misstatements (audit adjustments). The client probably made some adjustments, but separating these adjustments from the auditor’s identified items was impossible with the available data.
Practical implications
The results show that significant audit adjustments decline earnings management. Paying more attention to a high-quality audit performed by the audit firms, auditors, managers and users and, consequently, discovering misstatements and adjusting or reporting them would decline the earnings management’s unfavorable impacts.
Social implications
The unfavorable consequences of earnings management can cause the inappropriate transfer of wealth in the capital market and some investors’ loss to others’ benefit. These consequences can cause a loss of trust and leave unfavorable psychological effects on the capital market and society. Identifying and adjusting significant misstatements can lead to the decline of such impacts.
Originality/value
The previous studies assessed the relationship between identified and adjusted misstatements (audit adjustments) and earnings quality or earnings management. However, this study focuses on audit adjustments’ materiality to assess the impact of significant adjustments on earnings management.
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Jalil Khaksar, Mahdi Salehi and Mahmoud Lari DashtBayaz
This paper aims to analyze the relationship between the following auditor's characteristics with detecting frauds in the listed companies on the Tehran Stock Exchange.
Abstract
Purpose
This paper aims to analyze the relationship between the following auditor's characteristics with detecting frauds in the listed companies on the Tehran Stock Exchange.
Design/methodology/approach
A multiple regression model is used to test the research hypothesis. The hypothesis was further tested with a sample of 187 companies listed on the Tehran Stock Exchange (1,309 observations) from 2012 to 2018 and by using multiple regression models based on panel data and the random-effects model.
Findings
The results suggest a positive and significant relationship between audit firms' size, auditor rotation, specialization in the industry, the audit market's focus, auditor's independence, audit report lag and renewal of financial statements with fraud detection. The results revealed a significant relationship between the period of auditor tenure, auditor's narcissism, audit fees and the type of auditors' opinion (un-qualified opinion) with fraud detection.
Originality/value
As the present study is a pioneer in examining this issue in the emerging markets, it provides users, analysts and legal entities with useful information about auditor characteristics that significantly affect the fraud detection of financial statements. The results mitigate the literature gap and improve knowledge in this area.
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Afsaneh Lotfi, Mahdi Salehi and Mahmoud Lari Dashtbayaz
The purpose of this present study is to assess the impact of intellectual capital (IC) on fraud in listed firms' financial statements on the Tehran Stock Exchange (TSE). In other…
Abstract
Purpose
The purpose of this present study is to assess the impact of intellectual capital (IC) on fraud in listed firms' financial statements on the Tehran Stock Exchange (TSE). In other words, this paper seeks to figure out whether IC and its components, namely, the efficiency of human capital (HC), structural capital (SC), relational capital (RC) and customer capital (CC).
Design/methodology/approach
The logistic regression model is used for analyzing the material of this study. Research hypotheses are also examined using a sample of 187 listed firms on the TSE during 2011–2018 by employing the logistic regression pattern based on synthetic data technique. Moreover, some robustness checks are also used to ensure the correctness of the obtained results.
Findings
The findings show a negative and significant relationship between IC and its components, including the efficiency of HC, SC, RC and CC, and fraud in financial statements. This means that by investing in the IC and its components, the amount of fraud in business firms' financial statements decreases.
Originality/value
Since few studies are carried out by existing literature, this paper is among the pioneer efforts assessing IC's potential impact on fraud commitment. The findings apply to policymakers to improve the clarity of the business atmosphere of Iran.
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Mahdi Salehi, Mahmoud Lari DashtBayaz and Samaneh Mohammadi Moghadam
The purpose of this paper is to assess the relationship between some management features (management capability, management entrenchment, agency costs and overconfidence) and the…
Abstract
Purpose
The purpose of this paper is to assess the relationship between some management features (management capability, management entrenchment, agency costs and overconfidence) and the innovation of companies listed on the Tehran Stock Exchange.
Design/methodology/approach
The study carried out during 2009–2015. A total of 125 companies were selected from eight industries as the sample of study using the method of systematic elimination. A descriptive-correlational design was used in this study and panel data regression models were employed for developing the relationship between research variables.
Findings
The obtained results indicated that managerial ability could foster innovation, while managerial entrenchment could stifle innovation and agency costs and overconfidence have no effect on innovation.
Originality/value
The current study is almost the first project which focuses on the management characteristics and firm innovation in developing countries.
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Mohammad Hossein Zolfaghar Arani, Mahmoud Lari Dashtbayaz and Mahdi Salehi
This study aims to determine the contributing factors to technical knowledge valuation at the related quadruple levels of commercialisation, including the idea, benchtop technical…
Abstract
Purpose
This study aims to determine the contributing factors to technical knowledge valuation at the related quadruple levels of commercialisation, including the idea, benchtop technical knowledge, prototype technical knowledge and commercialised technical knowledge, and then classify the factors by the valuation objectives.
Design/methodology/approach
The study method is descriptive-causal, and documentation tools of published scientific research articles in authentic local and international journals were used to extract the contributing factors to technical knowledge valuation. Moreover, the Likert spectrum-based questionnaire is used to determine the weight of each determined component. On the other hand, hierarchical analysis is used based on the extracted results from the distributed classification questionnaire among scholars to determine the allocable weight of each component.
Findings
The results indicate that at the idea step, the highest ranks among the contributing factors to technical knowledge valuation are for the indicators of innovation rate enhancement, novelty, creation of new products, profitability growth and dependence decline. In the benchtop technical knowledge step, the indicators of profitability growth, product quality enhancement, novelty, production risk drop, innovation rate enhancement, production costs drop, product price competitiveness and independence from rare machinery have the highest impact coefficients on valuation. Moreover, the prioritisation of factors in prototype technical knowledge shows that the indicators of productive risk decline, infrastructure, decrease in product delivery time, productivity growth and profitability growth are the most critical factors in technical knowledge valuation. Finally, profitability growth factors, production cost drop, productive risk drop, creating a new product, product price competitiveness and dependence decline determine the most valuable technical knowledge in the commercialisation phase.
Research limitations/implications
The most salient innovation of the study involves the development levels of technical knowledge in the commercialisation cycle for determining the contributing factors to technical knowledge valuation and using multivariate decision-making methods to classify the so-called factors. The major limitation can be the context of the study because the paper was carried out by Iranian assessors and specialists using the experiences, opinions and approaches of opinion leaders based on the dominant social, cultural and accounting background of a developing country, not a developed one.
Originality/value
This paper is applicable because it elucidates the technical knowledge valuation factors for managers and owners of technological and knowledge-based companies to facilitate value determination and register the technical knowledge of innovative products in financial statements for the logical presentation of available intangible assets in the economic unit. Besides, in the high-tech area, collecting information from the contributing factors to technical knowledge valuation provides an opportunity to support intellectual property rights and facilitate transaction processes. Finally, in legal areas, in cases of breaching intellectual property rights relative to technical knowledge, the determination of technical knowledge value provides a solid basis for estimating the damage rate.
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Mahdi Salehi, Mahmoud Lari DashtBayaz and Eisa Abyaz
This study aims to investigate the relationship between prevention and panic of COVID-19 and distress tolerance, happiness and emotional intelligence (EI) in undergraduate and…
Abstract
Purpose
This study aims to investigate the relationship between prevention and panic of COVID-19 and distress tolerance, happiness and emotional intelligence (EI) in undergraduate and postgraduate accounting students in Iraq. In other words, this study seeks to answer whether or not different types of prevention and fear of COVID-19 can lead to improved distress tolerance, happiness and EI.
Design/methodology/approach
The study’s statistical population comprises 298 undergraduate and 138 postgraduate students in Iraq who were selected as the sample size using the Cochran sampling method. In this study, partial least squares regression (PLS) have been used to investigate the effect of independent variables on the dependent variable.
Findings
The results showed a positive and significant relationship between COVID-19 prevention and distress tolerance and happiness, but no significant relationship was observed between COVID-19 prevention and EI. Also, no significant relationship was observed between fear of COVID-19 and distress tolerance and happiness, but there was a positive and significant relationship between fear of COVID-19 and EI.
Originality/value
The present study’s results can provide valuable information to everyone and help the development of science and knowledge because so far, and to the best of the authors’ knowledge, no research has examined the impact of prevention and panic of COVID-19 on distress tolerance, happiness and EI in students.
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Mahmoud Lari Dashtbayaz, Mahdi Salehi, Alieyh Mirzaei and Hamideh Nazaridavaji
The purpose of this study is to evaluate the impact of corporate governance on intellectual capital (IC) in companies listed on the Tehran stock exchange.
Abstract
Purpose
The purpose of this study is to evaluate the impact of corporate governance on intellectual capital (IC) in companies listed on the Tehran stock exchange.
Design/methodology/approach
In this paper, the board features (size, independence and CEO duality) and the characteristics of the audit committee (financial expertise, independence and size) are considered to measure the factors of corporate governance. The IC is also divided into communicative, human, structural and value-added IC. Research data are gathered using a sample of 132 companies during 2013-2016. Research hypotheses are analyzed using panel data and logistic regression models.
Findings
The findings indicate that while the board’s independence, financial expertise and the size of the audit committee are negatively related to the communicative capital, the relationship between audit committee independence and communicative capital is positive and significant. Further, the authors observe that there is a positive relationship between board independence and human capital, a negative and significant link between audit committee size and human capital. By the way, the results reveal that audit committee independence and audit committee size have, respectively positive and negative impact on structural capital.
Originality/value
The results of the current study may give more insight into the relationship between corporate governance and managerial capital in developing nations.
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Jalil Khaksar, Mahdi Salehi and Mahmoud Lari DashtBayaz
This study aims to assess the relationship between political connections, auditor characteristics (audit quality and industry specialization) and auditors’ intrinsic…
Abstract
Purpose
This study aims to assess the relationship between political connections, auditor characteristics (audit quality and industry specialization) and auditors’ intrinsic characteristics (narcissism) in listed firms on the Tehran Stock Exchange. In other words, this paper attempts to answer the question “whether political connections, audit quality and industry specialization contribute to the growth of narcissism and overconfidence of auditors of listed firms on the Tehran Stock Exchange or not.”
Design/methodology/approach
A multivariate regression model is used for hypothesis testing. The study’s hypotheses were also examined using a sample of 768-year firm listed on the Tehran Stock Exchange during 2013–2018 and by using the multiple regression pattern.
Findings
The obtained results indicate a negative and significant association between political relations, narcissism and overconfidence. The auditor’s overconfidence will go down by increasing political relations. Moreover, the results show a positive and significant relationship between audit quality, industry specialization and narcissism. On the other hand, to the best of authors’ knowledge, this study measured, for the first time, the severity of political connections by using the exploratory factor analysis of eight variables (long-term liabilities, firm size, financial leverage, export, human resources, major governmental shareholders, board members affiliated to the government and institutional ownership).
Originality/value
The authors figured out that few studies carried out, so far, in the emergent markets on political connections and their impacts on narcissism and overconfidence of auditors, so this paper aims to assess the effect of such a phenomenon in the emergent markets and contributes to the development of knowledge and science in this field.
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Mahdi Salehi, Mahmoud Lari DashtBayaz, Somayeh Hassanpour and Hossein Tarighi
This study aims to investigate the effects of managerial overconfidence on conditional conservatism and real earnings management among companies listed on the Tehran Stock…
Abstract
Purpose
This study aims to investigate the effects of managerial overconfidence on conditional conservatism and real earnings management among companies listed on the Tehran Stock Exchange (TSE).
Design/methodology/approach
In this paper, the authors used the model of Ball and Shivakumar (2006) for measuring the effect of moderating overconfident management on conditional conservatism in accounting; moreover, the model of Roychowdhury (2006) is used for evaluating the relationship between managerial overconfidence and real earnings management. The study population consists of 1,144 observations and 143 firms listed on TSE over an eight-year period between 2008 and 2015. The statistical model used in this paper is a multivariate regression model; besides, the statistical technique used to test the hypotheses is panel data.
Findings
Consistent with the expectations, the results showed that there is a negative relationship between managerial overconfidence and conditional conservatism. Furthermore, the findings suggest that managerial overconfidence is negatively connected with real earnings management. This implies that when Iranian managers have many financial problems, they do not engage in real earnings management, as the real earnings management does not increase the value of the companies in the long run and even it cause damage to them.
Originality/value
This is one of the most important research that simultaneously surveys the impact of managerial overconfidence on conditional conservatism and real earnings management in a developing market called Iran. What really sets this study apart from other papers is that most Iranian firms between 2008 and 2015 because of economic sanctions faced severe financial problems. From this perspective, this study contributes to the research literature by expanding the knowledge of conservatism in the emerging economies.
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Mahmoud Lari Dashtbayaz, Mahdi Salehi and Mahdi Hedayatzadeh
This study aims to assess the relationship between internal control weakness and different types of auditor opinions in fraudulent and non-fraudulent firms. The study's main…
Abstract
Purpose
This study aims to assess the relationship between internal control weakness and different types of auditor opinions in fraudulent and non-fraudulent firms. The study's main objective is to investigate fraud in business firms and analyze internal controls and types of proposed opinions by the auditor about his desired firm. The outbreak of fraud in firms is of utmost importance to a broad spectrum of society. Internal controls and the auditor's role in preventing and detecting frauds should not be taken for granted.
Design/methodology/approach
The present study's statistical population includes 179 listed firms on the Stock Exchange selected as the study sample using the systematic elimination method during 2012–2019. As the study's dependent variable (the type of auditor’s opinion), research hypotheses were analyzed using the Logit regression model.
Findings
The results show that the relationship between internal control weakness and opinion type is significantly different in fraudulent and non-fraudulent firms. Moreover, the relationship between internal control weakness and type of auditor opinion in fraudulent firms and the relationship between internal control weakness and type of auditor opinion in non-fraudulent firms are significant.
Originality/value
By assessing the related literature, the authors have found no study to directly assess the comparative relationship between internal control weakness and the type of auditor opinion, which can be named as the main objective of the study.
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