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Growing Science » Management Science Letters » An investigate on relationship between moral hazard and corporate governance with earning forecast quality in the Tehran Stock Exchange

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Management Science Letters

ISSN 1923-9343 (Online) - ISSN 1923-9335 (Print)
Quarterly Publication
Volume 2 Issue 8 pp. 2795-2802 , 2012

An investigate on relationship between moral hazard and corporate governance with earning forecast quality in the Tehran Stock Exchange Pages 2795-2802 Right click to download the paper Download PDF

Authors: Fatemeh Rouhi, Seyed ahmad Khalifehsultani

DOI: 10.5267/j.msl.2012.10.007

Keywords: Corporate governance, Moral hazard, Quality of earning, Tehran Stock Exchange

Abstract: Moral hazard and corporate governance are important factors in determining market transparency. The proposed study of this paper investigates the effects of these two factors on earning quality as well as forecasted earning in Tehran Stock Exchange. We have selected some stocks based on some predefined circumstances and extracted some necessary information over the period of 2005-2010. Based on these criteria, the information of 132 firms are qualified for the proposed study of this paper using 792 years/firm from 23 industries. There are two hypotheses associated with this study. According to the first hypothesis, we investigate whether there is a relationship between board of director independency and quality of forecasted earning. In the second hypothesis, we look to find out whether there is a relationship between the size of board of directors and quality of forecasted earning. We have used three models and using ordinary regression analysis tried to test the models. Based on the results of the survey, we have concluded that moral hazard does not influence forecasted earning, significantly. However, the results of this survey concluded that there is a meaningful relationship between forecasted earning and quality of earning. In terms of members of editorial board, quality of earning has a reverse relationship with absolute deviation of forecasted earning. In other words, as the number of editorial board increases, we may expect a more precise earning estimation. The other observation is that non-board member & apos; s duties have better motivation to contribute to firms and could make some changes.

How to cite this paper
Rouhi, F & Khalifehsultani, S. (2012). An investigate on relationship between moral hazard and corporate governance with earning forecast quality in the Tehran Stock Exchange.Management Science Letters , 2(8), 2795-2802.

Refrences
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Journal: Management Science Letters | Year: 2012 | Volume: 2 | Issue: 8 | Views: 2414 | Reviews: 0

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