Investigating Effect of Accounting Conservatism and Earning Quality on Reaction of Investors to Cash Stocks of Companies Accepted in Tehran Stock Exchange
Managers tend to hide bad news about the performance of companies and potentially pretend that they are in a desirable state. In companies with conservative reporting environment, there are more limited management opportunities and motives for hiding bad news. Therefore, in these companies, projects with negative net current value are more probably identified and set aside in a timely manner. Main goal of the present research was to study effect of accounting conservatism and earning quality on reaction of investors to cash holding level in the companies accepted in Tehran Stock Exchange. The statistical sample included 160 companies accepted in Tehran Stock Exchange from 2007 to 2011. The data were analyzed using regression method, the results of which indicated that financial reporting environment and change in quality of the published information had no effect on the shareholders' reaction to cash balance. It also seemed that changes in cash balance were followed by users of financial statements only when the company reduced the reported earnings due to accounting conservative procedures.
Volume (Year): 4 (2014)
Issue (Month): 1 (January)
|Contact details of provider:|| Web page: http://hrmars.com/index.php/pages/detail/Accounting-Finance-Journal|
References listed on IDEAS
Please report citation or reference errors to , or , if you are the registered author of the cited work, log in to your RePEc Author Service profile, click on "citations" and make appropriate adjustments.:
- Edward Lee & Ronan Powell, 2011. "Excess cash holdings and shareholder value," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 51(2), pages 549-574, 06.
- Francis, Jere R. & Martin, Xiumin, 2010. "Acquisition profitability and timely loss recognition," Journal of Accounting and Economics, Elsevier, vol. 49(1-2), pages 161-178, February.
- Zhang, Jieying, 2008. "The contracting benefits of accounting conservatism to lenders and borrowers," Journal of Accounting and Economics, Elsevier, vol. 45(1), pages 27-54, March.
- Michael Faulkender & Rong Wang, 2006. "Corporate Financial Policy and the Value of Cash," Journal of Finance, American Finance Association, vol. 61(4), pages 1957-1990, 08.
When requesting a correction, please mention this item's handle: RePEc:hur:ijaraf:v:4:y:2014:i:1:p:331-339. See general information about how to correct material in RePEc.
For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: (Hassan Danial Aslam)
If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.
If references are entirely missing, you can add them using this form.
If the full references list an item that is present in RePEc, but the system did not link to it, you can help with this form.
If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your profile, as there may be some citations waiting for confirmation.
Please note that corrections may take a couple of weeks to filter through the various RePEc services.