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Investigating the relationship between production market power, industry structure and profit management in companies listed on the Tehran Stock Exchange

Number of pages: 100 File Format: word File Code: 29749
Year: Not Specified University Degree: Master's degree Category: Librarianship
Tags/Keywords: Financial reports - pricing - Profit management - stock exchange
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  • Summary of Investigating the relationship between production market power, industry structure and profit management in companies listed on the Tehran Stock Exchange

    Dissertation for Master of Accounting

    Accounting Orientation

    Abstract:

    The strong position of a production gives the company a lot of staying power, in other words, the company has more flexibility when responding to unexpected changes in the needs of the consumer of production. Pricing power gives these companies more profit and allows them to maintain their superior position. The high safety of these companies against cash shortages increases their ability to face unfavorable economic situation. Advanced competition increases the risk of liquidation of the company. On the other hand, the higher financial flexibility of the companies indicates the success of the strong production market, which expresses the pressures on the managers to be involved in the management of Sudra. The statistical population includes all the companies admitted to the Tehran Stock Exchange, of which 110 companies were selected as a sample. The main hypotheses of the research have been tested in two categories (the pricing power of the company's production market and profit management - companies in more competitive industries and profit management). The results of the research, the statistical method used to analyze the data, is a descriptive-survey method. Also, t-test was used to check the existence of heterogeneity of variance. The statistical population of this research is all the companies admitted to the Tehran Stock Exchange during the period from 2007 to 2011. The results of the investigation showed that in the time periods examined in this research, according to hypothesis one, there is a significant relationship between pricing power and profit management and the role of profit management in the formation of product pricing. And according to the second hypothesis, the results of this research showed that the more competitive the companies are in the market, the more profit management they apply in order to price their goods and services in order to reach the target market. Key words: stock exchange - pricing - profit management - financial reports

    Chapter One:

    Overview of Research

    1-1- Introduction

    A large amount of empirical research has been done on profit smoothing in different countries (Benish [1], 2001). Some other researches have examined profit smoothing at the international level (Darugh, Pourjalali and Sodagaran, 1999, Bhattacharya, Dovek and Welker, 2001). Factors that have been taken into consideration in previous researches include things like borrowing costs, size, ownership and management compensation. Today, profit management is considered one of the controversial and attractive topics in accounting researches. Because investors pay special attention to the profit figure as one of the important decision factors, these researches have their own importance from the behavioral aspect. Researches have shown that the low and stable fluctuation of profit indicates its quality. In this way, investors invest with more confidence in the shares of companies whose profit trends are more stable. When companies are under increasing pressure in an unfavorable economic situation, their managers request the accounting unit to improve the last line of the financial statements (i.e. profit), and thereby change its information content. Accounting, despite all its flexibility, does not seem to be able to provide useful data for management in such situations (Hope and Hope, 1996). Moore's data is a very complex category of decision-making needs, because a diverse range of its users, such as investors (since they need to know the profitability and stability of the company before investing in it), managers (need to know about the company's financial situation), banks and financiers (need to know about the company's ability to repay loans) need various information. Companies are used, profit management is applied to the general intervention of management in the process of determining the desired goals of management (Wilde et al., 2001: 120).Profit management is a method used by management to manipulate data. For example, smoothing profits to make investors more confident about the sustainability of profits is an example of data manipulation. Such actions may significantly affect the data in the financial statements. There are several ways in which journal entries can be used to manage profits. Most of the time, illegitimate registrations in accounting books are used to cover up financial abuses, other times, registrations are used as a tool for profit management. Company management, when applying profit management, clearly knows that the purpose of this work is to maintain the interests of the company in front of the profit owners. Even in other cases, profit management in order to obtain rewards assigned to managers is due to keeping as much of the company as possible from the owners.

    2-1- Statement of the problem

    Financial analysts consider the power of the production market as a very important factor in their evaluation of the company's future prospects. The most important decision in evaluating a business is pricing power.

    The strong position of a production gives a lot of staying power to the company. Responding to unexpected changes in consumer needs, production has more flexibility. Pricing power gives these companies more profit and allows them to maintain their superior position. The high safety of these companies against cash shortages increases their ability to face unfavorable economic situation. Advanced competition increases the risk of liquidation of the company. On the other hand, the higher financial flexibility of companies indicates the success of strong production markets, which expresses the pressures on managers to engage in sudra management. Other benefits of production pricing power include higher value of stock prices and higher liquidity of stocks because when investors are given more information, they transfer more capital. Stronger, it shows more stability, so there is less need to manipulate earnings. A number of researches confirm that the market environment of a company's products affects factors such as investments, financing, cash distribution, company management, analysts' profit forecasts, and insurance decisions of that company. 2011, Gralon and Michaeli [3] 2007 and Fama [4] 1980) believe that how product market power affects the strategic decision to manage the company's reported earnings is a largely neglected issue. Most of the researches related to earnings management are looking for information through which companies are able to deceive the capital market by manipulating earnings, but we have very little information in We have the case of characteristics of companies that stimulate earnings management. (Haley and Wallen 1999[5]) These studies need more research to explain how business factors stimulate accruals. Some companies are involved in discretionary accruals with the power to price inferior products and by adding a new dimension to our understanding of the transparency and value of the company's financial statements. These findings reflect an industry level that suggests that more competitive industries are more relevant in profit manipulation. Also, empirical evidence based on the strength and competition of the product market has a direct implication on the company's value and profit management.

    We also expand our analysis by examining the relationship between different sizes of industry structure and profit management. Using three alternative indicators of industry competition, our results show that the more competition in an industry, the more profitable management becomes, indicating that the absence of a competitive environment reduces the need to engage in manipulative competition in Sudra. The literature and sources also argue that firms compete with each other for limited funds from national capital markets. (De Ammond and Versicchia 1991[6]) claim that increased disclosure will reduce information asymmetry and, as a result, lower the firm's cost of capital.

  • Contents & References of Investigating the relationship between production market power, industry structure and profit management in companies listed on the Tehran Stock Exchange

    List:

    Table of contents

    Abstract: 1

    Chapter 1: 2

    1-1- Introduction. 3

    2-1- statement of the problem. 5

    3-1- profit management. 8

    4-1- Importance and necessity of conducting research: 14

    5-1- Research objectives: 14

    6-1- Research hypotheses: 15

    7-1- Research questions: 15

    8-1- Definitions of words. 15

    1-8-1- Power of the production market. 15

    2-8-1- Industry competition. 16

    3-8-1- profit management. 16

    The second chapter: 18

    1-2- Introduction. 19

    2-2- An overview of the fundamental concept of profit and its importance: 24

    3-2- The concept of profit at the level of structure (rules and definitions): 26

    4-2- The concept of profit at the level of meanings (connection with economic realities): 26

    5-2- The concept of profit at the level of action (how it is used by users): 27

    6-2- Stability and Stability of profit: 28

    1-6-2- Stability of profit (permanent profit) 28

    2-6-2- Permanent components versus temporary components of profit. 29

    3-6-2- profit management tools. 31

    7-2- Research background. 36

    8-2- Research in the field of profit management in Iran. 43

    9-2- Definition of profit management. 44

    1-9-2- Effective factors in product pricing: 44

    2-9-2- Discovery of profit management. 47

    10-2- Theoretical framework of profit management. 49

    1-10-2- Components of profit manipulation. 49

    2-10-2- Literature review and evaluation of the definition of profit management. 51

    The third chapter: 54

    1-3- Introduction. 55

    2-3- Type of research. 55

    3-3- Statistical population. 56

    4-3- Thematic, temporal and spatial scope of research. 56

    1-4-3- Subject area. 56

    2-4-3- Time domain. 56

    3-4-3- spatial territory. 56

    5-3- Sampling method. 57

    6-3- Determining the sample size. 57

    2-4- Examining the companies used in this research. 59

    8-3- Information collection method. 62

    9-3- The quality of research measurement tools. 62

    10-3- Statistical method of data analysis 62

    1-10-3- Independent t test. 63

    2-10-3- Checking the reliability and unreliability of data 63

    3-10-3-Histogram and normality test. 64

    11-3- Definition of variables and analysis method. 64

    1-11-3- Measurement of production market power. 64

    2-11-3- Measurement of industry competition. 65

    3-11-3- Profit management measurement. 66

    4-11-3- Defining research control variables. 67

    5-11-3- Research model. 69

    Chapter Four: 71

    1-4- Introduction. 72

    3-4- Descriptive statistics. 73

    4-4- Test of hypotheses: 75

    4-4-4- First hypothesis: 75

    5-4-4- Second hypothesis: 77

    Chapter five. 79

    1-5- Introduction: 80

    2-5- Summary of the research. 80

    3-5- Description of test results: 82

    4-5- Limitations of research: 85

    5-5- Suggestions: 85

    1-5-5- Practical suggestions: 85

    2-5-5- Suggestions for future research. 86

    6- Sources and sources: 87

    Source:

    - Sources and sources:

    Persian sources

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Investigating the relationship between production market power, industry structure and profit management in companies listed on the Tehran Stock Exchange
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