Iranian Journal of Accounting, Auditing and Finance
Volume:4 Issue: 3, Summer 2020

Corporate lobbying is one of the most important ways companies, society, and even citizens can directly and legally influence the development and implementation of new laws and regulations. Theoretically, lobbying can be a threat to auditor independence as well. This study investigates the impact of corporate lobbying on board compensation and audit quality. Using a sample of 150 companies listed on the Tehran Stock Exchange over period 2012-2018, the study shows that corporate lobbying has a significant impact on board compensation and audit quality. This is the first study investigating the impact of corporate lobbying on board compensation and audit quality of companies listed on the Tehran Stock Exchange.

The main aim of this study is to separate the origins of “selling, general, and administrative costs (SG&A)” and “cost of goods sold (COGS)” stickiness and investigate their sources effects on earnings forecast accuracy (EFA). In previous research, various micro and macro factors have been shown to affect asymmetric cost behavior. These factors are rooted in the industry and firm-specific characteristics or specific events, which may occur each year at national or international scales. In this study, a new methodology is presented to separate the cost stickiness sources in the first step, including a novel method for calculating cost stickiness for each firm-year. In the second step, we investigated each firm-year stickiness effect and each stickiness source on the EFA. The study's statistical population consisted of all companies listed on the Tehran Stock Exchange, from which 1080 observations in the 2014-2018 period were selected and reviewed. Our results indicated that EFA has a negative and significant relationship with SG&A andCOGS stickiness, the stickiness of each year, and each company. Still, no significant relationship was found with the stickiness of each industry. Our results demonstrated that the stickiness of SG&A to COGS has a greater effect on the EFA. The findings suggest that each year's events and the intra-organizational events of each company have a greater impact on cost behavior. Hence, managers and financial analysts must consider each source of cost stickiness, especially year-specific events and firm-specific characteristics, and consider their earnings forecast effects to improve their EFA.

In recent years, to increase the robustness of methodology sections of accounting research, applying quasi-experimental methods has become a popular approach in archival-empirical research of top-tier accounting journals. The purpose of this study is to discuss the usefulness of the two most robust methods, including difference-in-differences (DD) and propensity score matching (PSM). This paper discusses DD and PSM design and reviews DD and PSM's use in articles of American Accounting Associations’ journals in recent years. In addition to a simple explanation of DD and PSM, this research provides a list of credible empirical accounting studies that have used these two methods. The research also explores the reasons for using the two methods in the empirical-archival studies of accounting and shows that in addition to extracting a causal relationship, the most important reason for using the two methods is to reduce the potential concerns surrounding the "omitted variables" "and "heterogeneity of treatment and control groups". Overall, by highlighting the importance and application of the DD and the PSM, this research can help the methodology sections' robustness in the empirical-archive accounting research that focuses on causal relationships and provide a simple and practical guide, especially for Ph.D. students in accounting.

CEO's overconfidence is one of the essential indices that influences financial policies. When sales decline, overconfident CEOs have overconfidence in their ability to bring sales back to the previous level and tend to overestimate sales, thereby increasing cost stickiness. Further, cost stickiness by manipulating the natural and expected costs process can affect accounting information content. Therefore, the CEO's overconfidence by influencing cost stickiness can also affect the value relevance. This paper shows that there is a positive and significant relationship between overconfidence and cost stickiness. There is also a negative and significant relationship between overconfidence and value relevance. Nevertheless, the effect of overconfidence through cost stickiness on value relevance is not confirmed.

This paper aims to analyze the impact of financial statement information on macroeconomic indicators, including the labor market and domestic product data growth. We attempt to examine the effect of variables by applying Classical and Bayesian analyses. We applied quarterly GDP (Growth Domestic Product) data from the real-time data set for macroeconomists maintained by the Statistical Center of Iran (SCI). Additionally, financial statement information is collected from the Tehran Exchange Market database. The results suggest that earnings growth dispersion provides related data about final GDP growth. The results suggest that after considering the effect of other influential factors, specifically real initial GDP, earnings growth dispersion is useful in forecasting future GDP changes. However, the results indicate that there is no link between earnings growth dispersion and GDP restatements. The findings are important for economists and policymakers to have more accurate economic estimation and prediction by applying for accounting numbers.

The present study aims to assess abnormal the effect of audit fees on listed firms' internal control weakness on Tehran Stock Exchange. The multivariate regression model is used for testing research hypotheses. Ordinary Least Squares and fixed effects regression are used for more confidence in the hypothesis's test results. The present study's data include 1309 listed observations on the Tehran Stock Exchange, which are analyzed during 2012-2018. Stata Software is employed for data analysis and testing the hypotheses. The results show that there is a positive and significant relationship between abnormal audit fees and internal control weakness, and such a conclusion can be indicative of the fact that audit quality is lower in firms with abnormal audit fees, so internal control weaknesses of such firms is more than that of the others. The study outcomes may give great strength to researchers and policymakers. In this paper, four variables of the financial weakness of internal control, nonfinancial weakness of internal control, weakness in the IT system, and delay in the audit report are used for the first time to evaluate internal control weakness better using the exploratory factor analysis.

This study aims to examine how board incentives and board interlocks affect audit fees. Using multiple linear regression with panel data, this research shows a significant relationship between the board incentives and future audit fees. In contrast, this relationship is not significant for current audit fees. Furthermore, there is a significant relationship between board interlock in companies with future audit fees, while this relationship is not significant for the current audit fees. This paper contributes to the literature on the determinants of audit fees.