Investigating the relationship between general expenses of companies listed on the Tehran Stock Exchange and financial performance measurement criteria

Abstract

In this research, the role of public expenses in advancing the performance of the company has been discussed using financial performance indicators. For this purpose, the main and independent variable of this research is the ratio of public expenses to profit and the dependent variable in general is the financial performance measurement criteria and in detail investment return, sales return and added economic value. The period of this research is between 1383-1387. In this period, 34 sample companies have been selected from the statistical community of listed companies. This research includes a main hypothesis under the title "There is a direct and significant relationship between the ratio of public expenses to profit and financial performance indicators." And three sub-hypotheses, which are respectively:

1) There is a direct and significant relationship between the ratio of public expenses to profit and investment return. 2) There is a direct and significant relationship between the ratio of general expenses to profit and sales efficiency. 3) There is a direct and significant relationship between the ratio of general expenses to profit and economic added value. After the analysis, all three sub-hypotheses of the research have been confirmed with 95% certainty, and finally the main hypothesis has also been confirmed.

Introduction

Income limitation, the existence of competitive markets and the increasing withdrawal of commercial companies from the competition scene, the examination of the possibilities of reduction or adjustment in the general expenses sector (general, administrative and sales expenses) has become an inevitable necessity. Made a converter. Public expenses and their actual performance play a great role in advancing the goals of commercial companies. In addition to the necessity of public expenses, the question will always remain that how much of these expenses are necessary for the efficiency and effectiveness of economic enterprises? Will the increase in public spending lead to the growth and prosperity of business units? What is the limit of these expenses and how should it be beyond that? and similar questions.

On the other hand, evaluation indicators are classified into two financial and non-financial sets. Financial criteria are preferable to non-financial criteria due to their quantitative, practical and tangible characteristics. including financial performance measurement criteria; Return on investment, return on sales and added value are economic. Therefore, in order to achieve the goals of this research, we will investigate the relationship between public expenses and financial performance measurement criteria, which are investment returns, sales returns, and economic added value in detail

Chapter One:

Research Overview

1-1) Introduction

In this chapter, we will discuss the research overview. In total, this chapter includes; Statement of the problem, goals, importance, analytical model, theoretical framework, assumptions, time period, territories and finally the definition of key words of the research.

2-1) Statement of the problem

The main purpose of this study is to investigate the role of public expenses in advancing the goals of public companies. And how much of these costs will be necessary, effective and justifiable in the life cycle of a business unit. On the other hand, evaluating the performance of commercial enterprises requires knowing the criteria and indicators of performance measurement.

In order to eliminate the anomalies that are basically caused by emphasizing and focusing too much on one scale of performance, multiple indicators are usually used to evaluate performance. Evaluation indicators are classified into two sets of financial and non-financial. Financial criteria are preferable to non-financial criteria due to their features such as being quantitative, practical and concrete (Aziz Ali Var, 2014, p. 35)[1].

Among the financial criteria for measuring performance Investment return[2], sales return[3] and economic added value[4]. Therefore, in order to achieve the goals of this research, we will investigate the relationship between public expenses and financial performance measurement criteria.

The information of this research will be collected in a 5-year period, from 1383 to the end of 1387.

The independent variable of public expenses and the dependent variables of this research will be investment, sales efficiency, and economic added value.

3-1) Research objectives

Since one of the important items in the profit and loss statement, which reduces the company's operating profit and also plays a significant role in the process of achieving the goals of business units, is general expenses, which can be found in many commercial companies today.

3-1) Research Objectives

Since one of the important items in the profit and loss statement that reduces the operating profit of the company and also plays a significant role in the process of achieving the goals of the business units, it is the general expenses, which today in many commercial companies have a significant figure. Therefore, the purpose of this study will be to investigate the efficiency and effectiveness of these costs, which will be tested by financial performance measurement criteria. For this purpose, the topic of this research is "investigating the relationship between the public expenses of companies listed on the Tehran Stock Exchange and financial performance measurement criteria".

4-1) The importance of the research

Decision making is a matter that is involved from the simplest to the most complex affairs of human life. The speed of technological development, the expansion of communications, the connection of countries' markets to each other, and the like have led to the widening of operational scopes and, as a result, the complexity of economic and investment environments, as a result of which economic decision-making has become an issue that is more and more difficult and requires higher information and capabilities for decision-makers. This is where the importance of obtaining more useful information for more accurate decisions reveals its necessity in advance and it is natural that in such an environment full of competition and change, economic decisions also rely more and more on knowledge and information and distance themselves from random and illogical aspects. Meanwhile, financial and accounting information, especially financial statements, can be considered the basis of many economic decisions of users. Also, internal users use accounting information to make decisions or plan for the future of the organization as well as control and lead (Moradzadeh Fard, 2013, p. 14)[5]. In the meantime, the contribution of public expenses in the performance of business units will be specifically measured. 5-1) The theoretical framework of the research Performance indicators should be such as to encourage the alignment of goals. This situation can be realized when the best interests and desired interests of the managers of the organization are compatible with the best interests and desired interests of the organization. These indicators should be selected and developed in such a way that they make managers willing to make voluntary decisions. In such a way that with the implementation of these decisions, it is possible to achieve the goals of the organization. It is obvious that if the target index is a suitable scale, it can improve the performance of the organization (Alivar, 2013, p. 73)[6].

At the time of the First World War, the "Du Pont" company used a method for financial analysis, which was later used by many large companies in the United States of America. The purpose of this is to provide a measure to evaluate management performance through the calculation of investment returns [7] (Taqvi, 2011, p. 381) [8]. Economic value added [9] is an index based on value-based management [10] that controls the total value created in a business. Economic value added is not a strategy, but the way we measure results. The economic value added index was created by Stern Stewart to express the challenges that companies face in the field of performance measurement. The economic added value expresses the economic profitability by measuring the profit after deducting the expected return of the shareholders (Roodpashti Guide, 1385, p. 385) [11]. To the main variable and independent research for this general public cost Varier and generally dependent on financial criteria and benchmarks for performance They have. The course of this research between 1383-1387. In this era of 34 companies example of a collection of statistical society values ??companies have been selected. This total research includes a main theory under the title "for the cost of the general public and in favor of the indexes measure financial performance of direct contact and there was a meaningful". And three secondary theory respectively are as follows: 1) For the costs of the public interest and return of investment directly and there was a meaningful. 2) For the cost of the general public and in favor and return of sales directly and there was a meaningful. 3) For the cost of the public interest and economic value-added directly and there was a meaningful.