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Article

Mahdi Salehi, Mahmoud Mousavi Shiri and Seyedeh Zahra Hossini

The purpose of this paper is to emphasize the relationship between managerial ability, earnings management, internal control quality and audit fees to establish whether or…

Abstract

Purpose

The purpose of this paper is to emphasize the relationship between managerial ability, earnings management, internal control quality and audit fees to establish whether or not there is a significant relationship between the variables of managerial ability, earnings management, internal control quality and the audit fees.

Design/methodology/approach

The study sample includes 190 listed companies on the Tehran Stock Exchange during 2009–2016. Research hypotheses were tested using the statistical methods of multivariable linear regression and data envelopment analysis pattern.

Findings

The obtained results indicate that there is a significant and direct relationship between managerial ability and internal control quality as well as real earnings management and internal control quality. Based on the results obtained from the second hypothesis, the authors could claim that there is an inverse and significant relationship managerial ability and audit fees. The third hypothesis also revealed that in companies with lower audit fees, there is a stronger relationship between managerial ability and internal control quality. The results of related tests show no significant relationship between accrual-based earnings management and internal control quality.

Originality/value

This paper is the first study in Iran whose main focus is on the relationship between managerial ability, earnings management, internal control quality and audit fees.

Details

International Journal of Productivity and Performance Management, vol. 69 no. 4
Type: Research Article
ISSN: 1741-0401

Keywords

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Article

Mahdi Salehi and Mahmoud Mousavi Shiri

Bankruptcy, stock price fluctuations and making decisions to invest on the listed companies on the Tehran Stock Exchange show the need to have some tools for evaluating…

Abstract

Purpose

Bankruptcy, stock price fluctuations and making decisions to invest on the listed companies on the Tehran Stock Exchange show the need to have some tools for evaluating the financial potential of companies. One of the tools for evaluating financial power to investment in companies is using analysis of financial ratios and obtaining the patterns for predicting the bankruptcy of companies. The purpose of this study is to modify the current patterns for predicting bankruptcy in proportion to the environmental status of Iran and to present a new pattern for determining the bankruptcy of the listed companies.

Design/methodology/approach

To modify the patterns and present a new pattern, in this research, the hypotheses pertinent to the ability for right classification of the companies are designed by the modified patterns of predicting the company’s bankruptcy and ranking, that is according to the envelopment analysis method and by comparison of the results and presenting a new prediction pattern.

Findings

The hypotheses test results show that modification of bankruptcy patterns and presentation of a new bankruptcy pattern are confirmed by the data envelopment analysis.

Originality/value

The current paper is almost the first paper which combined several different methods of bankruptcy prediction.

Details

International Journal of Law and Management, vol. 58 no. 3
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Mahmoud Mousavi Shiri, Mahdi Salehi, Fatemeh Abbasi and Shayan Farhangdoust

In the process of reporting accounting information, the auditor’s objective is to detect possible misstatements and errors in accounting information. Audit evidence aids…

Abstract

Purpose

In the process of reporting accounting information, the auditor’s objective is to detect possible misstatements and errors in accounting information. Audit evidence aids auditors in providing reasonable assurance about the quality of financial reporting. Studying the quality of family firms’ financial reporting is of higher importance relative to non-family firms due to lower risk of accounting manipulation. Therefore, the purpose of this paper is to examine the relationship between family ownership structure and financial reporting quality from an auditing perspective.

Design/methodology/approach

To analyze the research hypotheses, the authors use a sample data consisted of 221 companies listed on the Tehran Stock Exchange (including 52 family and 169 non-family firms) over a five-year span from 2011 to 2015.

Findings

Using multivariate regression analysis of panel data, our results indicate that audit risk in family firms is lower than their counterparts. Likewise, the findings are indicative of lower audit fees paid by family firms as compared to non-family ones. The authors also find that auditors put more effort in family firms and thus audit effort is more significant for these kinds of firms.

Originality/value

The study focuses on family ownership and financial reporting quality in a developing country like Iran and the results of the study may be beneficial to other developing nations, as Iran stock market possesses some unique features which are not normally prevailing in other equity markets, even in the Middle East.

Details

Journal of Family Business Management, vol. 8 no. 3
Type: Research Article
ISSN: 2043-6238

Keywords

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Article

Mahdi Salehi, Mahmoud Mousavi Shiri and Mohammad Bolandraftar Pasikhani

Financial distress is the most notable distress for companies. During the past four decades, predicting corporate bankruptcy and financial distress has become a…

Abstract

Purpose

Financial distress is the most notable distress for companies. During the past four decades, predicting corporate bankruptcy and financial distress has become a significant concern for the various stakeholders in firms. This paper aims to predict financial distress of Iranian firms, with four techniques: support vector machines, artificial neural networks (ANN), k-nearest neighbor and na

i

ve bayesian classifier by using accounting information of the firms for two years prior to financial distress.

Design/methodology/approach

The distressed companies in this study are chosen based on Article 141 of Iranian Commercial Codes, i.e. accumulated losses exceeds half of equity, based on which 117 companies qualified for the current study. The research population includes all the companies listed on Tehran Stock Exchange during the financial period from 2011-2012 to 2013-2014, that is, three consecutive periods.

Findings

By making a comparison between performances of models, it is concluded that ANN outperforms other techniques.

Originality/value

The current study is almost the first study in Iran which used such methods to analyzing the data. So, the results may be helpful in the Iranian condition as well for other developing nations.

Details

International Journal of Law and Management, vol. 58 no. 2
Type: Research Article
ISSN: 1754-243X

Keywords

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Article

Mahmoud Lari Dashtbayaz, Mahdi Salehi and Toktam Safdel

The purpose of this paper is to investigate the relationship between internal controls weakness and financial reporting quality and the effect of family ownership on the…

Abstract

Purpose

The purpose of this paper is to investigate the relationship between internal controls weakness and financial reporting quality and the effect of family ownership on the mentioned relationship in Iranian listed firms.

Design/methodology/approach

In this way, the authors included the number of 139 firms from 2013 to 2017, of which 28 were family firms. The hypotheses are analyzed based on panel data and means comparison.

Findings

The results illustrated that weakness in internal controls has a significant negative relationship with financial reporting quality. In other words, internal controls weakness decreases the quality of financial reporting quality. Moreover, the results showed that being familial does not affect the aforementioned relationship.

Originality/value

Consequently, there is no suitable criteria to distinguish family firms and there is a need to take them into serious consideration because very few studies have been conducted focusing on this issue in Iran, as it is considered an argumentative subject to be discussed in the Iranian market.

Details

Journal of Family Business Management, vol. 9 no. 3
Type: Research Article
ISSN: 2043-6238

Keywords

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