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  3. The relationship between profit timeliness and information asymmetry and adjustment of the growth opportunity variable in Iran's capital market

The relationship between profit timeliness and information asymmetry and adjustment of the growth opportunity variable in Iran's capital market

Number of pages: 110 File Format: word File Code: 29816
Year: 2014 University Degree: Master's degree Category: Librarianship
Tags/Keywords: Accounting profit - Information asymmetry. - Qualitative characteristics - to be on time
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  • Summary of The relationship between profit timeliness and information asymmetry and adjustment of the growth opportunity variable in Iran's capital market

    ConclusionLetter for Master of Accounting Degree "M.A"

    Abstract

    Profit must be available in time to be effective. The timeliness of the profit makes the yield real and if it is presented in short intervals, it reduces the information risk. Timeliness is considered one of the most important quality characteristics of financial information. If in a potential transaction one party has more information than the other party, there is information asymmetry. This leads to information asymmetry in the stock market. In this research, the relationship between the timeliness of profit with information asymmetry and the adjustment of the growth opportunity variable in Iran's capital market, based on the data of 78 companies during the period of 1387-1391, has been examined. Panel regression method was used from Eviews software to analyze research data. In terms of its purpose, this research is an applied research of the correlation type. According to the results obtained from the first hypothesis, the timeliness of profit has a positive and significant relationship with information asymmetry. According to the results of the second hypothesis test, the moderating variable of growth opportunity has an effect on the relationship between timeliness and information asymmetry.

    Key words: Qualitative characteristics, timeliness, accounting profit, information asymmetry.

    - Introduction

    Responsibility[1], whose origin is respect for human rights, is relevant at different national levels and commercial enterprises. Managers, in front of investors, creditors and other interested parties, are obliged to inform them about the use of economic resources and the results of the business unit's operations by providing timely, transparent and reliable information, and provide them with the possibility of making rational decisions and judgments. Making reasonable economic decisions and optimal allocation of limited and scarce resources to superior activities is not possible without timely, valid and reliable information. Timeliness[2] means that information should be available to users in the shortest possible time and as quickly as possible. The shorter the time interval between the end of the financial year and the publication date of the financial statements [3] of the business units, the benefits and usefulness of the annual audited financial statements of the business units will increase. Increasing the time interval between the end of the financial year and the date of publication of financial statements increases the possibility of disclosure of information to the benefit of a group of users and to the detriment of others. Also, research hypotheses are given in this chapter. And some key terms are defined at the end of this chapter. 1-2-Statement of the problem The profit category has a special place in accounting and finance due to its qualitative discussion and also as a tool for decision making. Although the accrual concept of profit as a fundamental tool faces criticism, but from an information point of view, this concept expresses the result of a company's activity from an accounting and financial point of view. Based on the assumptions of "Efficient Market" [4] as well as the conducted research, it can be seen that the accounting profit has a load and informational content. Calculation of accounting profit as a criterion for evaluating the performance of companies or the information included in its calculation has always been emphasized by professional accountants and financial analysts and commentators. Qualitative features of accounting information are attributes and qualities of accounting information that increase its usefulness and effectiveness. In fact, quality features are features that provide information and make reports usable for users. One of the two main dimensions of qualitative characteristics is relevance, in the sense that in order for information to be usable, it must be related to the decision-making needs of users, and information then has the quality of relevance that can influence economic decisions by helping users evaluate past, present, and future events, or by confirming or correcting their past evaluations (Bahramfar and Rasouli, 2017). Profits must be made available in a timely manner to be effective. The timeliness of the profit makes the return real and if it is presented in short intervals, it reduces the information risk [5] (Nasrallahi, 2019). Timeliness is one of the most important features.Timeliness is one of the most important qualitative characteristics of financial information. Timeliness means that information should be available to users in the shortest possible time and as quickly as possible. The shorter the time interval between the end of the financial year and the publication date of the financial statements [6] of the business units, the more useful the annual audited financial statements of the business units are. The increase in the time interval between the end of the financial year and the publication date of the financial statements increases the probability of disclosure of information to the benefit of a group of users and to the detriment of others. that investors in the capital market[8] will consider for the desired stocks will be different. As a result, the actual value of the company's shares will be different from the expected value of the shareholders (Diamond and Vercchia, 1991: 65).

    If in a potential transaction one party has more information than the other party, there is information asymmetry. This problem includes accounting information. Directors of stock companies have more information about the value of the company than shareholders outside the company. This leads to information asymmetry in the stock market (Noroosh 1384, 1993).

    According to the said contents, the present study tries to investigate the relationship between the timeliness of profit with information asymmetry and the use of growth opportunity[9] as a moderating variable in the Iranian capital market. In other words, the purpose of this research is to determine whether the timeliness of profit and growth opportunity has an important and meaningful effect on information asymmetry? 1-3- Theoretical framework and conceptual model of the research 1-1-3 Theoretical framework of the research As shown in the figure below, timeliness is the independent variable and information asymmetry is the dependent variable of this research. Also, growth opportunity is placed as a moderating variable between independent and dependent variable. Maintaining public interest requires reliable and timely financial reporting of operations and financial health of public companies. The optimal presentation of accounting and financial reporting information will help the society to allocate and use its economic resources in the most useful way.

    In today's competitive world, creating value and creating wealth for shareholders is one of the main goals of each person to invest in an investment firm or an investable company. Investors want to increase their capital day by day and maximize it. For this reason, they are looking for investment opportunities that will create the most wealth for them. To achieve their goals, investors need tools and criteria to identify and measure the potential value in each investment opportunity. These criteria should be reliable enough so that investors can make their decisions based on them and spend their capital in business activities. This is where the knowledge of accounting and financial management comes to the aid of investors to help them in their decisions. Now, according to what was described above, in this research, we seek to understand whether there is a significant relationship between the timeliness of profits and information asymmetry in companies listed on the Tehran Stock Exchange. Timeliness

     

     

    Information asymmetry

     

     

     

     

     

     

     

     

     

     

     

    Diagram 1-1- Model Conceptual (source: researcher made)

    1-4- The importance and necessity of research

    Playing with "financial numbers" [10] can leave a completely negative impact when discovered. In accounting, the use of profit management [11] can change the perceptions of others regarding the performance of his company. The assessment of the profitability of the company may be misinterpreted and cause inappropriate determination of the price of debt securities [12] and capital. When errors are discovered. The company will no longer gain market confidence. Researches have shown that the low and stable fluctuation of profit indicates its quality. In this way, investors invest with more confidence in the stocks of companies whose profit trends are more stable.

  • Contents & References of The relationship between profit timeliness and information asymmetry and adjustment of the growth opportunity variable in Iran's capital market

    List:

     

    Table of Contents

    Title

    Abstract 1

    Chapter One: Research Overview

    1-1- Introduction. 3

    1-2- statement of the problem. 3

    1-3- Theoretical framework and conceptual model of research. 5

    1-1-3 theoretical framework of the research. 5

    1-2-3 conceptual model of research. 6

    1-4- Importance and necessity of research. 6

    1-5- research objectives. 7

    1-5-1 general objectives. 7

    1-5-2 scientific goals. 7

    1-5-3 practical goals. 8

    1-6-Research assumptions. 8

    1-7- Definition of research words and terms. 8

    1-7-1 Conceptual definitions of research variables. 8

    1-7-2 research method. 9

    1-7-3 Society and statistical sample. 9

    1-7-4-Operational definitions of research variables. 10

    Chapter Two: Research Background

    2-1- Introduction. 13

    2-2- The concept of profit. 13

    2-2-1 The concept of profit at the level of structure (rules and definitions) 15

    2-2-2 The concept of profit at the level of meanings (connection with economic realities) 15

    2-2-3 The concept of profit at the level of action (how to use it by users) 16

    2-2-4 Conceptual framework of reporting. 17

    2-3- Qualitative characteristics of financial information. 18

    2-3-1 quality of "importance" 20

    2-3-2 relevance 21

    2-3-3 predictive and confirmatory value 21

    2-3-4 feature selection 22

    2-3-5 reliability 22

    2-3-6 Honest expression 23

    2-3-7 Predominance of content over form 23

    2-3-8 Neutrality 24

    2-3-9 Caution 24

    2-3-10 Completeness 24

    2-3-11 Comparability 25

    2-3-12 consistency of procedure 25

    2-3-13 Disclosure. 26

    2-3-14 Comprehensibility 26

    2-3-15 Integration and classification of information 26

    2-3-16 Power of users 26

    2-3-17 Limitations governing the qualitative characteristics of financial information 27

    2-3-17-1 Balance between qualitative characteristics 27

    2-3-17-2 Timeliness 28

    2-3-17-2-1 factors affecting the timeliness of profit and its reporting. 28

    2-4- Information asymmetry. 31

    2-4-1 Information asymmetry and market efficiency. 31

    2-4-1-1 weak form. 32

    2-4-2-2 semi strong form. 32

    2-4-1-3 strong form. 32

    2-4-2 Information asymmetry and the price range of stock purchase and sale offers. 34

    2-4-3 Consequences of information asymmetry in the capital market. 36

    2-4-4 Information asymmetry and messaging hypothesis. 39

    2-5- Theoretical expression of the relationship between profit timeliness and information asymmetry and growth opportunity. 39

    2-6- Background of the research. 40

    2-6-1 Foreign research. 40

    2-6-2 Internal investigation. 42

    Chapter Three: Research Methodology

    3-1- Introduction. 46

    3-2- Research method. 47

    3-3- The scope of research. 48

    3-3-1 Subject area. 48

    3-3-2 Spatial territory. 48

    3-3-3 time domain. 48

    3-4- Methods and tools of data collection 48

    3-5- Population and statistical sample. 49

    3-6- Research hypotheses. 50

    3-6-1 Statistical model of research. 50

    3-6-2 dependent variable. 51

    3-6-3 independent variable. 51

    3-6-3-1 Modulating variable. 51

    3-7- Data analysis method 52

    3-7-1 Correlation. 53

    3-7-1-1 coefficient of determination and adjusted coefficient of determination 53

    3-7-1-2 correlation coefficient. 54

    3-7-2 Regression. 55

    3-7-2-1 Simple linear regression 55

    3-7-2-2 Multivariate regression 55

    3-7-3 Collinearity test. 56

    3-8- Introduction of Eviews software 57

    3-9- Types of data 58

    3-10- Composite time series data model (panel) 59

    3-11- Types of models used in composite data. 59

    3-12- Regression analysis. 60

    3-13- Classical assumptions. 61

    Chapter Four: Statistical Data Analysis

    4-1-Introduction 64

    4-2-Descriptive indices of variables 64

    4-3-Method of testing research hypotheses. 66

    4- 4- Results of regression analysis by panel method. 68

    4-4-1 Test of significance of fixed effects. 68

    4-4-2 Hausman test. 69

    4-4-3 unit root test in mixed data. 70

    4-5- Statistical results of assumptions.71

    4-5-1 The first hypothesis. 71

    4-5-2 The second hypothesis. 73

    Chapter Five: Conclusions and Suggestions

    5-1- Introduction. 76

    5-2- Evaluation and description of the results of the hypothesis test 76

    5-2-1 The conclusion of the first hypothesis test. 76

    5-2-2 Conclusion of the second hypothesis test. 77

    5-3- Suggestions 78

    5-3-1 Suggestions in line with the research findings. 78

    5-3-1-1 Suggestion to the audit organization and official accountants. 78

    5-3-2 Suggestions based on research results. 79

    5-3-3 Suggestions for future research. 79

    5-4- Research limitations. 80

    Sources and sources

    Persian sources. 82

    Latin sources. 84

    Appendices 85

    Source:

    Sources and sources

    Persian sources

    Azer, A. and Mansour Momeni, (1385), "Statistics and its application in management", organization for the study and compilation of humanities textbooks of universities (SAT), second volume.

    Bahramfar, N., and Walialah Rasouli, (1387), "Qualitative characteristics of management accounting information and its role in management decision-making", Accounting and auditing reviews, number 24.

    Pertoi, N. and Amirpouria Nasab, (2013), "Introduction to the qualitative characteristics of accounting information", Accountant Journal, No. 144.

    Tark, M. and Reza Tehrani, (2013), "Investigation of the relationship between different profits and cash flows with stock returns in companies listed on the Tehran Stock Exchange", Master's thesis, Islamic Azad University, Arak branch.

    Jahankhani, A., and Hossein Abdeh Tabrizi, (1372), "Efficient Capital Market Theory", Journal of Financial Research, No. 1, Volume 1.

    Hafez Nia, M.R., (1385), "Introduction to Research Methodology in Humanities", Organization for the Study and Compilation of Humanities Textbooks of Universities (Samt).

    Khaki, G.R., (1388), "Research Methodology with an Approach to Dissertation Writing", Reflection Publications, 5th Edition.

    Khodamipour, A. and Mohammad Qadiri, (2008), "Investigating the relationship between accruals and information asymmetry in Tehran Stock Exchange", Shiraz University Accounting and Auditing Advances, No. 2.

    Khosh Taynet, M., Farzaneh Yousefi Asl, (2008), "The relationship between information symmetry and asymmetry with conservatism, Journal of Experimental Financial Accounting Studies", No. 20.

    Davoudabadi Farahani, (2008), "Evaluation of the role of accounting information in reducing information asymmetry in Tehran Stock Exchange", Master's thesis, Islamic Azad University, Arak Branch.

    Delavar, A. , (2016), "Theoretical and scientific foundations of research in humanities and social sciences", Rushd Publications.

    Rezazadeh, D. and Nasser Azad, (2007), "Relationship between information asymmetry and conservatism in financial reporting", Accounting and Auditing Quarterly No. 54.

    Audit organization. (1386), "Accounting Standards", publication number 160.

    Saei, A., (1377), "Statistics in social sciences using SPSSpc software in social studies". Tehran, Jihad Publishing Institute.

    Shirin Bakhsh, S. and Hasan Khansari, Zahra, (2004), "The use of Eviews in econometrics", 2nd edition, Research Institute of Economic Affairs, Tehran, Iran.

    Ezzati, M. , (1376), "Research Methodology in Social Sciences", Tehran: Tarbiat Modares University Economic Research Institute.

    Fadainejad, M. A, (1373), "Weak Form Tests of Efficient Capital Market Theory in Tehran Stock Exchange", Journal of Financial Research, Number 5, Volume 2.

    Qaemi, M.H., and Mohammad Reza Watanparast, (1384), "Reviewing the Role of Accounting Information in Reducing Information Asymmetry in Tehran Stock Exchange", Accounting and Auditing Review Quarterly, Volume 12, Number 41.

    Kurdestani, G. and Ziauddin Majdi, (2006), "Investigating the relationship between the qualitative characteristics of profit and the cost of common stock capital", Journal of Accounting and Auditing Reviews, No. 48.

    20.              Kurdestani, G., and Habib Amir Beigi, (2008), "Investigating the relationship between profit temporal asymmetry and MTB as two criteria for conservatism evaluation", Accounting and Auditing Quarterly, Volume 15, Number 3. Nasrollahi, Z., and Aref Menesh, Zohra, (2019), "Investigating the relationship between ownership and profit quality in companies listed on the Tehran Stock Exchange", Journal of Accounting Knowledge, no. 3.

    Norush, A.

The relationship between profit timeliness and information asymmetry and adjustment of the growth opportunity variable in Iran's capital market
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