University of TehranAccounting and Auditing Review2645-802025320181023Factors Affecting the Internal Audit Effectiveness in the Viewpoint of Audit Committee MembersFactors Affecting the Internal Audit Effectiveness in the Viewpoint of Audit Committee Members3113266892310.22059/acctgrev.2018.246549.1007759FAAboozarOkhravi JoghanMSc., Department of Auditing, Khatam University, Tehran, Iran.NezamoddinRahimianAssistant Prof., Department of Accounting, Khatam University, Tehran, IranMaryamGharehDaghiAssistant Prof., Department of Iran Banking Institute, Tehran, IranJournal Article20171124<strong>Objective:</strong> Thisresearch has studied the effect of five main factors including competence of internal audit department, size of internal audit department, relationship between internal and external audit, management support for internal audit, and independence of internal audit on the internal audit effectiveness in companies that listed in the Tehran Stock Exchange in 2017.
<strong>Methods:</strong> Data was collected using paper and electronic questionnaires which their validity and reliability were confirmed. The population of this study included members of the audit committee in companies that listed in the Tehran Stock Exchange in 2017. Finally, 300 valid questionnaires were analyzed. In this study both descriptive and inferential analyses were used. Inferential statistics was used to confirm the validity of the model and confirmatory, and factor analysis and structural equation modeling were used to test the hypotheses.
<strong>Results:</strong> Findings from the research showed that competence of internal audit department, size of internal audit department, relationship between internal and external audit, management support for internal audit, and independence of internal audit have a positive and direct effect on internal audit effectiveness<strong>.</strong>
<strong>Conclusion: </strong>Promotion of five main factors including competence of internal audit department, size of internal audit department, relationship between internal and external audit, management support for internal audit, and independence of internal audit in companies that listed in the Tehran Stock Exchange led to an increase in the effectiveness of internal auditing and lack of attention each of these factors has reduced the effectiveness of internal auditing in these companies.
<strong>Objective:</strong> Thisresearch has studied the effect of five main factors including competence of internal audit department, size of internal audit department, relationship between internal and external audit, management support for internal audit, and independence of internal audit on the internal audit effectiveness in companies that listed in the Tehran Stock Exchange in 2017.
<strong>Methods:</strong> Data was collected using paper and electronic questionnaires which their validity and reliability were confirmed. The population of this study included members of the audit committee in companies that listed in the Tehran Stock Exchange in 2017. Finally, 300 valid questionnaires were analyzed. In this study both descriptive and inferential analyses were used. Inferential statistics was used to confirm the validity of the model and confirmatory, and factor analysis and structural equation modeling were used to test the hypotheses.
<strong>Results:</strong> Findings from the research showed that competence of internal audit department, size of internal audit department, relationship between internal and external audit, management support for internal audit, and independence of internal audit have a positive and direct effect on internal audit effectiveness<strong>.</strong>
<strong>Conclusion: </strong>Promotion of five main factors including competence of internal audit department, size of internal audit department, relationship between internal and external audit, management support for internal audit, and independence of internal audit in companies that listed in the Tehran Stock Exchange led to an increase in the effectiveness of internal auditing and lack of attention each of these factors has reduced the effectiveness of internal auditing in these companies.
University of TehranAccounting and Auditing Review2645-802025320181023Customer Concentration and bank loan contracts: Evidence from the Tehran Stock ExchangeCustomer Concentration and bank loan contracts: Evidence from the Tehran Stock Exchange3273466892510.22059/acctgrev.2018.251443.1007826FAZohreHajihaAssociate Prof., Department of Accounting, Faculty of Humanities, Tehran East Branch, Islamic Azad University, Tehran, IranNafisehTaghizadehPh.D. Candidate, Department of Accounting, Tehran South Branch, Islamic Azad University, Tehran, IranJournal Article20180129<strong>Objective</strong>: The variables of customer concentration and bank loan contracts can affect corporate finance activities, and customer concentration may increase corporate returns.
<strong>Methods</strong>: Under this study, the relationship between customer concentration and bank loan contracts have been investigated first and then the moderating effect of financial status variables and accounts payable on relationship between these variables have been measured. The statistical population of the study consisted of all listed companies in the Tehran Stock Exchange with regard to specified conditions, over the period of 6 years from 2011 to 2015.
<strong>Results</strong>: The results of the research show that there is a negative and significant relationship between customer concentration and bank loans has. In addition, the financial situation and accounts payable exacerbate the negative relationship between customer concentration and corporate bank lending.
<strong>Conclusion</strong>: With increasing customer concentration, banks are likely to consider tightening rules for corporations, and as a result, firms face financing constraints. Also the increase in the financial leverage and accounts payable that are important indicators in the decision making of banks for lending makes financial providers skeptical and therefore they would try to impose further restrictions on companies through getting collateral.
<strong>Objective</strong>: The variables of customer concentration and bank loan contracts can affect corporate finance activities, and customer concentration may increase corporate returns.
<strong>Methods</strong>: Under this study, the relationship between customer concentration and bank loan contracts have been investigated first and then the moderating effect of financial status variables and accounts payable on relationship between these variables have been measured. The statistical population of the study consisted of all listed companies in the Tehran Stock Exchange with regard to specified conditions, over the period of 6 years from 2011 to 2015.
<strong>Results</strong>: The results of the research show that there is a negative and significant relationship between customer concentration and bank loans has. In addition, the financial situation and accounts payable exacerbate the negative relationship between customer concentration and corporate bank lending.
<strong>Conclusion</strong>: With increasing customer concentration, banks are likely to consider tightening rules for corporations, and as a result, firms face financing constraints. Also the increase in the financial leverage and accounts payable that are important indicators in the decision making of banks for lending makes financial providers skeptical and therefore they would try to impose further restrictions on companies through getting collateral.
University of TehranAccounting and Auditing Review2645-802025320181023The Role of Environmental Uncertainty, Financial Constraints and Accounting Conservatism in Limiting the Performance Outcomes Due to Manager OverconfidenceThe Role of Environmental Uncertainty, Financial Constraints and Accounting Conservatism in Limiting the Performance Outcomes Due to Manager Overconfidence3473666892610.22059/acctgrev.2018.260311.1007919FAMohsenRashidi BaqhiAssistant Prof., Department of Accounting, Faculty of Economics and Administrative Sciences,Lorestan University, Lorestan, IranJournal Article20180616<strong>Objective:</strong> The excessive self-esteem of managers leads to postponing bad news due to weaknesses in performance, and conservatism can be a factor in modifying it. In this paper, the purpose is to examine the role of accounting conservatism in limiting the functional outcomes results from overconfidence managers. <br /><strong>Methods</strong>: The data of the companies listed in the Tehran Stock Exchange for the period of 2005 to 2017 has been extracted and the combined data regression model has been used to test the research hypotheses. <br /><strong>Results:</strong> The results of the first hypothesis of the research, based on the significant and interactive effect of conservatism and overconfidence on company's performance, are approved. Also, the second hypothesis of the research indicates that environmental uncertainty has a significant effect on the overall interaction of overconfidence managers and accounting conservatism on future performance. Finally, the results indicate that financing constraints have a significant effect on the overall interaction of overconfidence managers and accounting conservatism on future performance. <br /><strong>Conclusion: </strong>The results of the research indicate that business units with over-confident managers and conservative practices in accounting have a favorable future performance. Conservatism controls the managerial behaviors and it leads to improved performance, and the presence of funding constraints and environmental uncertainty due to fluctuation in the results lead to a reduction in management's optimism.<strong>Objective:</strong> The excessive self-esteem of managers leads to postponing bad news due to weaknesses in performance, and conservatism can be a factor in modifying it. In this paper, the purpose is to examine the role of accounting conservatism in limiting the functional outcomes results from overconfidence managers. <br /><strong>Methods</strong>: The data of the companies listed in the Tehran Stock Exchange for the period of 2005 to 2017 has been extracted and the combined data regression model has been used to test the research hypotheses. <br /><strong>Results:</strong> The results of the first hypothesis of the research, based on the significant and interactive effect of conservatism and overconfidence on company's performance, are approved. Also, the second hypothesis of the research indicates that environmental uncertainty has a significant effect on the overall interaction of overconfidence managers and accounting conservatism on future performance. Finally, the results indicate that financing constraints have a significant effect on the overall interaction of overconfidence managers and accounting conservatism on future performance. <br /><strong>Conclusion: </strong>The results of the research indicate that business units with over-confident managers and conservative practices in accounting have a favorable future performance. Conservatism controls the managerial behaviors and it leads to improved performance, and the presence of funding constraints and environmental uncertainty due to fluctuation in the results lead to a reduction in management's optimism.University of TehranAccounting and Auditing Review2645-802025320181023The Effect of Managers Expectations Stickiness on Relationship between Sustainability of Profitability Anomalies and Stock Price SynchronicityThe Effect of Managers Expectations Stickiness on Relationship between Sustainability of Profitability Anomalies and Stock Price Synchronicity3673866892810.22059/acctgrev.2018.250018.1007805FAYahyaShiriPh.D Candidate, Department of Accounting, Faculty of Economic and Social Sciences, Shahid Chamran University, Ahvaz, IranSeyed HoseinSajadiProf., Department of Accounting, Faculty of Management and Accounting, Shahid Beheshti University, Tehran, IranSeyed AliVaezAssistant Prof., Department of Accounting, Faculty of Economic and Social Sciences, Shahid Chamran University, Ahvaz, Iran0000-0001-9427-734xJournal Article20180110<strong>Objective: </strong>Market anomalieschange with economic conditions, stock markets, selected samples, time periods and differences between industries. Revision of past forecasts leads to forecast error. The revisions result from new information. On the other hand, some managers slowly revise their forecasts in responding to new information. Therefore, the purpose of this research is to investigate the relationship between the sustainability of profit signals and stock price synchronization. Also effect of stickiness of manager expectations on this relationship has been investigated. <br /><strong>Methods</strong>: The research hypotheses were tested and analyzed by using data from 178 companies for the period of 10 years from 1386 to 1395, and multi-variable regression and panel data methods. <br /><strong>Results:</strong> Research's findings showed that there was a negative and significant relationship between the sustainability of return on equity, return on asset and cash flows, and the synchronization of stock prices, also a positive significant relationship between the sustainability of gross profit and the price synchronization. Also, the moderator variable of stickiness of manager's expectations strengthens the relationship between sustainability of return on equity, return on asset, cash flows, gross profit, and the stock price synchronization. <br /><strong>Conclusion:</strong> According to the results, some of the sustainability of profitability measuresis due to the lack of rapid reaction of managers to new information. By increasing stickiness of manager's expectations, the information content of the profitability measuresreduces and leads to investors incorrect decisions. <br /> <br /> <strong>Objective: </strong>Market anomalieschange with economic conditions, stock markets, selected samples, time periods and differences between industries. Revision of past forecasts leads to forecast error. The revisions result from new information. On the other hand, some managers slowly revise their forecasts in responding to new information. Therefore, the purpose of this research is to investigate the relationship between the sustainability of profit signals and stock price synchronization. Also effect of stickiness of manager expectations on this relationship has been investigated. <br /><strong>Methods</strong>: The research hypotheses were tested and analyzed by using data from 178 companies for the period of 10 years from 1386 to 1395, and multi-variable regression and panel data methods. <br /><strong>Results:</strong> Research's findings showed that there was a negative and significant relationship between the sustainability of return on equity, return on asset and cash flows, and the synchronization of stock prices, also a positive significant relationship between the sustainability of gross profit and the price synchronization. Also, the moderator variable of stickiness of manager's expectations strengthens the relationship between sustainability of return on equity, return on asset, cash flows, gross profit, and the stock price synchronization. <br /><strong>Conclusion:</strong> According to the results, some of the sustainability of profitability measuresis due to the lack of rapid reaction of managers to new information. By increasing stickiness of manager's expectations, the information content of the profitability measuresreduces and leads to investors incorrect decisions. <br /> <br /> University of TehranAccounting and Auditing Review2645-802025320181023Technical Challenges of Implementing Fair Values in Financial Reporting of Iran: Emphasizing on IFRS13 RequirementsTechnical Challenges of Implementing Fair Values in Financial Reporting of Iran: Emphasizing on IFRS13 Requirements3874146893010.22059/acctgrev.2018.259285.1007908FAMaryamGolmohammadiPhD Candidate, Department of Accounting, Faculty of Social and Economic, Al-Zahra University, Tehran, IranAliRahmaniProf., Department of Accounting, Faculty of Social and Economic, Al-Zahra University, Tehran, Iran0000-0001-5458Journal Article20180602<strong>Objective:</strong> By the full adoption of IFRS, measurement and disclosure of fair values become more common in Iranian financial reporting. The present study aims to identify the technical challenges of fair value measurement and disclosure in accordance with the proposed framework in IFRS13 as well as technical factors underlying resistance to fair-value based financial reporting from accounting and auditing experts’ points of view in the financial reporting environment of Iran. <br /><strong>Methods:</strong> Technical challenges were identified by conducting a comprehensive review study with analytical approach. Then, we used qualitative content analysis method in order to elicit the primary model of categorizing technical challenges. Using the structured research questionnaires developed based on the Fuzzy Logic, experts’ points of view about technical challenges of fair-value based financial reporting in Iran were collected from three different groups: 1) Theorists and standard setters group (23 experts), 2) Independent auditors group (29 experts) and 3) financial managers group (27 experts). The data of the study was analyzed via Fuzzy Delphi method as well as Fuzzy Hierarchical Analysis method. <br /><strong>Results:</strong> Findings reveal that Iranian professional experts had a positive viewpoint about Fair-Value measurement paradigm. However, adoption of fair value measurement paradigm and widespread implementation of it is challenging in practice, because of the technical challenges of fair value measurement and disclosure. Results show that, in spite of positive viewpoint of professional experts about quality and quantity of disclosure requirements in IFRS 13, effectiveness of fair-value based financial reporting in Iran is controversial from two aspects: the usefulness of fair-value based information in evaluating of stewardship and efficiency of those requirements from information users’ standpoint. Results reveal that there is some possibility of non-compliance with IFRS13 disclosure requirements in financial reporting environment of Iran. In addition to the weakness of enforcement requirements in Iran, non-compliance with disclosure requirements will have negative impact on effectiveness of IFRS13 and fair-value based financial reporting. Albeit, some differences exist between experts’ viewpoint among “Theorists and standard setters group” and “executive group” in regards to determination of those disclosure requirements which will not be accomplished in practice and technical factors underlying resistance to adoption and implementation of IFRS13. <br /><strong>Conclusion:</strong> Standard setters and professional accounting and auditing communities should be aware of significant technical challenges of fair value accounting and also prepare suitable infrastructures for high quality fair-value based financial reporting as well as implementation of IFRS13 effectively and efficiently in financial reporting environment of Iran.<strong>Objective:</strong> By the full adoption of IFRS, measurement and disclosure of fair values become more common in Iranian financial reporting. The present study aims to identify the technical challenges of fair value measurement and disclosure in accordance with the proposed framework in IFRS13 as well as technical factors underlying resistance to fair-value based financial reporting from accounting and auditing experts’ points of view in the financial reporting environment of Iran. <br /><strong>Methods:</strong> Technical challenges were identified by conducting a comprehensive review study with analytical approach. Then, we used qualitative content analysis method in order to elicit the primary model of categorizing technical challenges. Using the structured research questionnaires developed based on the Fuzzy Logic, experts’ points of view about technical challenges of fair-value based financial reporting in Iran were collected from three different groups: 1) Theorists and standard setters group (23 experts), 2) Independent auditors group (29 experts) and 3) financial managers group (27 experts). The data of the study was analyzed via Fuzzy Delphi method as well as Fuzzy Hierarchical Analysis method. <br /><strong>Results:</strong> Findings reveal that Iranian professional experts had a positive viewpoint about Fair-Value measurement paradigm. However, adoption of fair value measurement paradigm and widespread implementation of it is challenging in practice, because of the technical challenges of fair value measurement and disclosure. Results show that, in spite of positive viewpoint of professional experts about quality and quantity of disclosure requirements in IFRS 13, effectiveness of fair-value based financial reporting in Iran is controversial from two aspects: the usefulness of fair-value based information in evaluating of stewardship and efficiency of those requirements from information users’ standpoint. Results reveal that there is some possibility of non-compliance with IFRS13 disclosure requirements in financial reporting environment of Iran. In addition to the weakness of enforcement requirements in Iran, non-compliance with disclosure requirements will have negative impact on effectiveness of IFRS13 and fair-value based financial reporting. Albeit, some differences exist between experts’ viewpoint among “Theorists and standard setters group” and “executive group” in regards to determination of those disclosure requirements which will not be accomplished in practice and technical factors underlying resistance to adoption and implementation of IFRS13. <br /><strong>Conclusion:</strong> Standard setters and professional accounting and auditing communities should be aware of significant technical challenges of fair value accounting and also prepare suitable infrastructures for high quality fair-value based financial reporting as well as implementation of IFRS13 effectively and efficiently in financial reporting environment of Iran.University of TehranAccounting and Auditing Review2645-802025320181023The Effect of Auditors’ Individual Differences on Their Professional Commitment: the Mediation Effect of Ethical Climate FitThe Effect of Auditors’ Individual Differences on Their Professional Commitment: the Mediation Effect of Ethical Climate Fit4154326893110.22059/acctgrev.2018.260636.1007921FASeyed MohammadMoshashaeiPh.D. Candidate, Department of Accounting, Faculty of Administrative & Economics, University of Isfahan, Isfahan, IranSeyed AbbasHashemiAssociate Prof., Department of Accounting, Faculty of Administrative & Economics, University of Isfahan, Isfahan, Iran0000-0001-7063-4541DariushForoughiAssociate Prof., Department of Accounting, Faculty of Administrative & Economics, University of Isfahan, Isfahan, Iran0000-0002-7164-6728Journal Article20180622<strong>Objective:</strong> The purpose of this study is to examine the effect of Auditors’ Individual Differences on their Professional Commitment. Also, the mediation effect of Ethical Climate Fit has been examined.
<strong>Methods:</strong> According to the Social Cognitive Theory, two criteria of Internal Locus of Control and Self-Efficacy were used as Auditors’ Individual Differences. To measure the Internal Locus of Control, Specter's questionnaire and Self-Efficacy variable, Sherer and Adams questionnaire were used. Also, Professional Commitment and Ethical Climate Fit were measured by Araniya questionnaire and Victor and Cullen questionnaire. The study is based on a survey of 252 Certified Public Accountants working in Audit Organization and Audit Firms. Research hypotheses were analyzed using ordinary least-squares regression and Sobel Test.
<strong>Results:</strong> The research results indicate that Auditors’ Individual Differences (Internal Locus of Control and Self-Efficacy) have positive and significant effect on their Professional Commitment. In addition, Ethical Climate Fit as a mediator variable enhances the relationship between Auditors’ Individual Differences (Internal Locus of Control and Self-Efficacy) and their Professional Commitment.
<strong>Conclusion:</strong> This result reflects the importance of the Ethical Climate in the Audit Organization and Audit Firms, which requires special attention of the authorities 9to this area.
<strong>Objective:</strong> The purpose of this study is to examine the effect of Auditors’ Individual Differences on their Professional Commitment. Also, the mediation effect of Ethical Climate Fit has been examined.
<strong>Methods:</strong> According to the Social Cognitive Theory, two criteria of Internal Locus of Control and Self-Efficacy were used as Auditors’ Individual Differences. To measure the Internal Locus of Control, Specter's questionnaire and Self-Efficacy variable, Sherer and Adams questionnaire were used. Also, Professional Commitment and Ethical Climate Fit were measured by Araniya questionnaire and Victor and Cullen questionnaire. The study is based on a survey of 252 Certified Public Accountants working in Audit Organization and Audit Firms. Research hypotheses were analyzed using ordinary least-squares regression and Sobel Test.
<strong>Results:</strong> The research results indicate that Auditors’ Individual Differences (Internal Locus of Control and Self-Efficacy) have positive and significant effect on their Professional Commitment. In addition, Ethical Climate Fit as a mediator variable enhances the relationship between Auditors’ Individual Differences (Internal Locus of Control and Self-Efficacy) and their Professional Commitment.
<strong>Conclusion:</strong> This result reflects the importance of the Ethical Climate in the Audit Organization and Audit Firms, which requires special attention of the authorities 9to this area.
University of TehranAccounting and Auditing Review2645-802025320181023The Impact of Corporate Governance on Financial Reporting Quality: Integrated ApproachThe Impact of Corporate Governance on Financial Reporting Quality: Integrated Approach4334556990810.22059/acctgrev.2018.205747.1007306FAMohammad RezaNikbakhtAssociate Prof., Department of Accounting, Faculty of Management, Tehran University, Tehran, Iran0000-0001-7909-4967MostafaAhmadkhanbeigiPhD Candidate, Department of Accounting, Faculty of Management, Tehran University, Tehran, IranJournal Article20160429Objective: Considering the importance of Corporate Governance and its impact on financial reporting quality, in this study, the impact of corporate governance on financial reporting quality (FRQ) has been investigated by using different criteria to measure the FRQ’s components (12 models) and four dimensions of corporate governance, including audit, board structure, transparency and disclosure and the ownership structure.<br />Methods: Using a combination of technical data for 102 companies the listed on Tehran Stock Exchange during the 7 year period 2006 to 2013 and by deploying Structural Equation Modeling and Partial Least Squares method.<br />Results: The results show that there is a significant relationship between corporate governance and financial reporting quality. Our findings are consistent with the research results in emerging markets.<br />Conclusion: Our findings indicate that two dimensions of corporate governance, auditor and ownership structure dimensions, have a significant impact on financial reporting quality (FRQ).Objective: Considering the importance of Corporate Governance and its impact on financial reporting quality, in this study, the impact of corporate governance on financial reporting quality (FRQ) has been investigated by using different criteria to measure the FRQ’s components (12 models) and four dimensions of corporate governance, including audit, board structure, transparency and disclosure and the ownership structure.<br />Methods: Using a combination of technical data for 102 companies the listed on Tehran Stock Exchange during the 7 year period 2006 to 2013 and by deploying Structural Equation Modeling and Partial Least Squares method.<br />Results: The results show that there is a significant relationship between corporate governance and financial reporting quality. Our findings are consistent with the research results in emerging markets.<br />Conclusion: Our findings indicate that two dimensions of corporate governance, auditor and ownership structure dimensions, have a significant impact on financial reporting quality (FRQ).