Profit quality before and after privatization of companies listed on Tehran Stock Exchange

Dissertation for obtaining a degree

Master

Accounting field, accounting orientation

Abstract:

The present research was carried out in order to provide evidence regarding the effect of "privatization" on the quality of profits of companies admitted to the Tehran Stock Exchange. The spatial domain of this research is Tehran Stock Exchange and its temporal domain is 1382 to 1392. In order to test the hypotheses, a sample of 43 companies was obtained from the companies admitted to the Tehran Stock Exchange by the method of systematic elimination. Multivariate linear regression and t-test were used to test the research hypotheses. The results of the data analysis show that there is no relationship between privatization and profit quality. In other words, the results of the research showed that privatization, which is considered an important process in the field of improving the state of the capital market, has no effect on the quality of profits.

Key words: privatization, quality of profit, discretionary accruals

Privatization is introduced as a general strategy and a multidisciplinary issue to promote economic development in transitioning, developing and developed countries, in such a way that the opinion of economists, financial analysts, lawyers, scholars Political science has attracted government officials, organizational experts and management consultants. In this research, this issue will be investigated with the priority of profit quality. In the following, generalities of the research problem, importance, objectives, hypotheses, research methods and tools will be presented and finally the definition of the discussed terms will be presented. be separate, because the government is good at making decisions, but it is a weak executive in implementing the same decisions. In fact, Drucker was the first person to use the term re-privatization, which indicated the need to transfer government assets to the private sector, because he believed that the government is a "weak manager". Today, there are few countries in the world that are not implementing privatization programs. At least in more than 83 countries of the world, privatization programs are considered as a solution for economic reforms. We can safely say that privatization is one of the most important economic components of the 21st century. In fact, privatization is the key element of structural reform programs (both in developed countries and in developing countries). The goal of such programs is to achieve higher economic effectiveness and accelerate economic growth. Many economists and supporters of economic reforms consider privatization as the "cornerstone" of structural reforms because they believe that privatization stimulates and expands the private sector, attracts foreign direct investment, expands competition, and liberalizes trade. and the development of the capital markets, as well as the governance system of the companies has been improved and has a significant impact on the financial and operational performance of the companies. On the other hand, the opponents of privatization state that companies and organizations that focus only on reducing costs and improving the expected performance of privatization provide services only to their profitable and accessible customers and refuse to provide services to the general public and customers that do not have any particular benefit for them.  Opponents of privatization usually state that private sector activists lobby with power channels in order to influence the decision-making and policies of the public sector in order to expand and develop the industry in question and the sector in which they operate. For example, the leaders of the privatization of prisons (companies active in the field of private prisons) in search of increasing the number of their prisoners (and consequently increasing the profitability) are influential in the political channels and apparatuses, they support the policies and laws related to the increase of prison sentences. From the point of view of the opponents of privatization, the sale of public assets to private individuals is like selling a family diamond or losing assets.

Evaluation of any policy from a set of behaviors can only be understood in terms of the goals set for it, so the first question that can be asked about privatization programs is, what are the goals of handing over state-owned companies? In this way and in general, we can divide the goals of privatization (transferring public companies to the private sector) into three general categories: 1- Economic goals 2- Financial goals 3- Social and political goals.

The economic goals of privatization include increasing productivity, strengthening the free market economy, strengthening and developing the capital market, increasing foreign exchange earnings, creating economic balance, optimal use of the country's facilities, etc. is Among the financial goals of privatization can be the profitability of the company, increasing the wealth of the shareholders, earning money, reducing the financial burden of the government and so on. He pointed out that the social and political goals include the distribution of capital among people, increase in employment, fair distribution of wealth and income, expansion of industrial property, increase in social welfare and so on.

According to the objectives of privatization that were mentioned above, as well as the approaches for and against privatization, in this research, we are looking to find out which group (in favor of privatization or against privatization) is according to the productivity of privatization programs in Iran. In this context, we discuss the issue of profit quality of companies before and after privatization, as a result of which we find out whether the quality of profit after privatization has improved, i.e. according to the performance of those in favor of privatization, or has it decreased, i.e. according to the performance of opponents of privatization. Privatization We seek to stimulate and develop the private sector, attract foreign direct investment, expand competition, liberalize trade, develop capital markets, and also improve the corporate governance system. Achieving these goals is not possible without providing correct and useful information to investors, shareholders and other information users. In this research, the profit quality criterion will be used to investigate this issue, in the sense that if the quality of the company's profit improved after privatization, it means that the privatization has been successful in achieving its goals (expansion of capital markets, reduction of asymmetry, etc.). They believe that companies and organizations that seek to reduce costs and increase profitability after the implementation of privatization, pay attention to people who are profitable for them in providing information and services, and do not pay attention to the entire capital market. Also, they believe that private sector activists lobby with power channels and some special people to gain power and influence in policy making and decision-making activities in the public sectors and industry they want, which is against the goals of privatization based on the distribution of capital among the general public. Therefore, the low quality of profit in this research will be a confirmation of the views of the opponents of privatization, because the low quality of profit shows that the management has manipulated the profit to protect the interests of certain people and caused its quality to decrease, which will result in the existence of an inefficient capital market. 1-4- Research Objectives The main goal of this research is to understand the phenomenon of profit quality and privatization and the factors affecting them. The special purpose of this research is to examine the changes in the quality of profits due to the phenomenon of privatization in companies listed on the Tehran Stock Exchange. 1-5- Research Hypothesis According to the purpose of the research, we formulate the research hypothesis as follows: There is a difference in the quality of profits of companies listed on the Tehran Stock Exchange before and after privatization.

1-6- The generalities of the research method and tools

The present research is practical in terms of purpose and descriptive-post-event in terms of data collection. In order to analyze data and test hypotheses, regression analysis and paired t-test will be used. For this purpose, Excel spreadsheet software will be used for the initial processing of information in order to enter SPSS statistical analysis software to perform tests and statistical analyses. 1-7- Scope of the research 1-7-1- Geographical territory: including public companies handed over to the private sector admitted to the Tehran Stock Exchange "Barayat Maneluzamani" and regardless of the geographical location of these companies. It is in different cities of the country.

1-7-2- Time period: three years before and three years after the transfer of public companies to the private sector.