This paper investigates the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE). The proposed study gathers the necessary data from 166 firms over the period 2004-2012 from firms whose shares were actively traded on TSE market. The study uses Panel data and with the implementation of linear regression technique examines four hypotheses. The results indicate that abnormal negative changes in cash are more persistence than positive abnormal changes. In addition, both positive and negative abnormal changes are more persistence than accruals. Market also has a good perception on abnormal positive and negative changes in cash.
Earning reports are the primary basis of investment decisions among many individuals and fund managers. Any positive/negative adjustment on quarterly financial report could influence investment strategies, which consequently make significant change on market value. In this paper, we present an empirical study on some selected firms on Tehran Stock exchange by looking the effects of quarterly earning adjustment on firm and market’s return. The proposed study selects all firms whose shares were actively and publicly traded over the period 2006-2011. The study investigates whether there is a meaningful relationship between the content of quarterly earnings report and stock price with/without the presence of control variables. The results have concluded that there are some meaningful relationships between change in earning and market value and return on firm with market value but market value seems to have no relationship with market return changes.
Dividend plays an important role on changing profitability in any business units including banking industry. In this paper, we present an empirical survey to study the effect of asymmetric information and growth opportunities on dividend policies among some private banks in Iran. The proposed study of this paper gathers the necessary information from all private banks whose shares are listed in Tehran Stock Exchange over the period 2005-2011. The study uses regression analysis to study the effects of various factors where dividend distribution policy is considered as a function of four independent variables namely spread, bank size, growth opportunity and cash flow. The results of the survey indicate that there are some positive and meaningful relationships between growth opportunity and dividend pay (0.003308), between bank size and dividend pay (0.019497) and between bank size and dividend pay (0.168821).
During the past few years, stock exchange investors confront numerous problems in terms of legal, environmental issues, etc. In this paper, we present an empirical study to detect important issues as barriers for investment in Tehran Stock Exchange. The study has categorized the issues into two groups of real world and legal issues. Since there are different issues involved as major barriers, the study uses analytical hierarchy process to rank them. The study extracts 18 important factors, which influence investors’ participation in Tehran Stock Exchange and using Borda method, prioritize them. The results of the survey indicate that in terms of real issues, Increase in quality of firms Financial Statement is number one priority followed by Increase stock exchange and agents’ proficiency and electronic equipment, Unchangeable investment market rules and bounding organization managers to flow them and Strict supervision on agents’ activities. In terms of legal issues, good supervision of provisions to force firms to reveal information correctly and restrict their secret bargaining is the most important factor followed by Using indirect investment guideline instead of direct investment, Increase in quality of firms’ Financial Statement and Investors’ training toward their rights.
Liquidity play an important role on performance of firms listed in Stock Exchange. When there is a good flow of trading stocks, people could expect more financing through absorbing investors on market. The proposed study of this paper investigates the relationship between Tobin’s Q and illiquidity in some selected firms in Tehran Stock Exchange. The proposed study selects non-financial stocks over the period of 2001-2010. The result of the survey indicates that there is a negative relationship between illiquidity and Tobin’s Q but the ratio is approximately seven percent. In other words, as illiquidity increases by one percent, we could expect only a small change in firms’ performance.
Risk management plays an important role in banking industry and there are literally many investigations to reduce any risk components in this industry. In this paper, we present a study on relationship between tail risk on earning management in Iranian banking industry. In this survey, we use two series of data. The first set is associated with yearly information of 19 different banks over the period 2005-2011 and it contains 114 observations. The second set of data includes weekly historical data of eight banks over the same period 2005-2011. In this survey, there are four objectives to be investigated. The first hypothesis considers the effects of seven independent variables on loan loss allowance as a fraction of total loans. The second model is associated with the effects of two independent variables on realized gains and losses on securities. The third objective is to study the effects of different independent variables with various interruptions on return of banking sectors. Finally, the last model investigates the effects of revenue management on tail risk. The result of this survey indicates that there is no relationship between tail risk and earning management.
This paper presents an empirical investigation to determine whether or there is any difference between the returns of two value and growth portfolios, sorted by price-to-earnings (P/E) and price-to-book value (P/BV), in terms of the ratios of market sensitivity to index (β), firm size and market liquidity in listed firms in Tehran Stock Exchange (TSE) over the period 2001-2008. The selected firms were collected from those with existing two-consecutive positive P/E and P/BV ratios and by excluding financial and holding firms. There were five independent variables for the proposed study of this paper including P/E, P/B, market size, market sensitivity beta (β) and market liquidity. In each year, we first sort firms in non-decreasing order and setup four set of portfolios with equal firms. Therefore, the first portfolio with the lowest P/E ratio is called value portfolio and the last one with the highest P/E ratio is called growth portfolio. This process was repeated based on P/BV ratio to determine value and growth portfolios, accordingly. The study investigated the characteristics of two portfolios based on firm size, β and liquidity. The study has implemented t-student and Levin’s test to examine different hypotheses and the results have indicated mix effects of market sensitivity, firm size and market liquidity on returns of the firms in various periods.
Capital structure is a controversial issue in the field of corporate finance. There are several studies to find a way to determine the optimal capital structure to minimize the cost of capital and maximize the corporate value. In fact, capital structure is a combination of firms’ liabilities and capital to meet long term assets. This paper investigates the role of the hierarchical theory in explaining the capital structure of the firms based on enterprise life cycle model on selected firms listed on Tehran Stock Exchange (TSE) using three methods of net equities, net liabilities and retained earnings. The study uses Park and Chen’s (2006) method [Park, Y., & Chen, K. H. (2006). The effect of accounting conservatism and life-cycle stages on firm valuation. Journal of Applied Business Research (JABR), 22(3), 75-92.] to categorize the life cycle of 81 randomly selected firms from TSE over the period 2007-2012. The results indicate that the hierarchical theory represents the growing firms better than the matured firms do. The results also show that firms were more willing to reduce their dividend per share for financing their projects.
Capital structure plays an important role on market growth investigation. In this paper, we investigate the relationship between capital structure as dependent variable and seven independent variables including tax rate, firms & apos; growth rate, fixed assets, firms & apos; size, operating risk, profitability and industry type. The proposed study of this paper uses the financial information of 107 selected companies from 18 different industries listed on Tehran Stock Exchange over the period of 2004-2011 covering 40% of total number of companies listed in this stock exchange. We use ordinary least square technique to study the relationships. The results of the survey indicate that the there is a positive relationship between tax rate and firm & apos; s growth rate, and capital structure. The result of the survey also indicates there is a negative relationship between firm & apos; s profitability and capital structure. However, there is no evidence to believe that there was any relationship between fixed assets and capital structure. We have also concluded that there was a negative relationship between firm & apos; s profitability and capital structure but the results of our survey did not indicate that there was any difference between the mean of profitability in various sectors.
During the past few years, there have been growing interests among researchers to study the effect of block share ownership on corporate earning especially in developing countries. The purpose of this paper is to consider the impact of block ownership on performance of firms in terms of profitability. The proposed study develops two econometric models and applies them on selected firms from Tehran Stock Exchange over the period 2002-2010. The primary objective of this survey is to find the relationship between return of assets and Tobin & apos; s Q as dependent variables with eight independent variables including company size, sales growth, block ownership, debt and liability ratios, etc. The results of implementation of ordinary least squares on two econometric models reveal that while there is no meaningful relationship between return of asset and block ownership there is a meaningful relationship between block ownership and Tobin & apos; s Q.