Designing an Earnings Management Improvement Model for Iranian knowledge-based Firms

Iranian Journal of Accounting, Auditing and Finance

مقاله 5، دوره 6، شماره 4 - شماره پیاپی 21، اسفند 2022، صفحه 61-79   

نوع مقاله: Original Article

شناسه دیجیتال (DOI): 10.22067/ijaaf.2022.42175

نویسندگان

Khadijeh Ghasemi¹؛ Hosein Jabbari^{* 2}؛ Meysam Arabzadeh¹؛ Hosein Panahian¹

¹Department of Accounting, Faculty of Humanities, Islamic Azad University, Kashan Branch, Kashan, Iran

²Department of Accounting, Faculty of Humanities, Islamic Azad University, Kashan Branch, Kashan, Iran

چکیده

The present study designs an earnings management improvement model appropriate for Iranian knowledge-based firms (KBFs). This study is interpretive in the model exploration phase and positivist in the model testing phase, and in general, this is applied research. The research sample in the qualitative phase comprises the experts in the field of earnings management, including accounting faculty members (8), senior managers of KBFs (7), and members of the Iranian National Tax Administration (INTA) (5); thus, a total number of 20 experts were interviewed to collect the qualitative data. The research questionnaire for collecting the quantitative data was designed according to the exploratory factor analysis (EFA). In the quantitative phase, using the sample size calculator (the G*Power software) at the alpha level of 0.1 and test power of 0.85, the final research sample comprises 153 participants. The research approach uses mixed methods, and the employed strategy is grounded theory. The constant comparative method in the three stages of open, axial, and selective coding based on the Strauss et al. (1996) method and the MAXQDA software was employed to analyse the data. The path analysis of the explored model was carried out based on the variance-based structural equation modeling (SEM) using SPSS version 24 and Smart PLS 3.0. The study results indicate 53 indicators, including more than 18 components and 7 latent variables.

کلیدواژه‌ها

Designing؛ Earnings Management؛ G*Power Software؛ Variance-based Structural Equation Modeling

مراجع

1. Allahyary, F. N. andAbbasi, R. (2012). Suitable Organizational Structure for Knowledge-Based Companies.Suitable Organizational Structure For Knowledge-Based Companies, 8(29), pp. 47-54. (In Persian)
2. Alzoubi, E. S. S. (2016). Ownership structure and earnings management: evidence from Jordan. International Journal of Accounting & Information Management. 24(2), pp. 135-161. https://doi.org/10.1108/IJAIM-06-2015-0031
3. An, Z., Li, D. and Yu, J. (2016). Earnings management, capital structure, and the role of institutional environments. Journal of Banking & Finance, 68(10), pp. 131-152.https://doi.org/10.1016/j.jbankfin.2016.02.007
4. Arifin, J. (2017). Corporate Governance and Intellectual Capital on Firm Value of Banking Sector Companies Listed on the Indonesia Stock Exchange in Period 2008-2012. Wacana Journal of Social and Humanity Studies, 20(1), pp. 36-
47.http://dx.doi.org/10.21776/ub.wacana.2017.020.01.5
5. Brödner, P. (2008). Sustainability in knowledge-based companies. Creating sustainable work systems. Routledge, London. pp. 79-95.
6. Bunge, M. (1976). A model for processes combining competition with cooperation, Applied Mathematical Modeling, 1(1), pp. 21-23
7. Callao, S., Jarne, J. I. and Wroblewski, D. (2021). A systematic approach to the motivations for earnings management: A literature review. International Journal of Emerging Trends in Social Sciences, 10(1), pp. 1-20.
8. Cimini, R. (2015). How has the financial crisis affected earnings management? A European study, Applied Economics, 47(3), pp. 302-317.
9. Clarke, T. (2005). Accounting for Enron: shareholder value and stakeholder interests. Corporate Governance: An International Review, 13(5), pp. 598-612. https://doi.org/10.1111/j.1467-8683.2005.00454.x.
10. Cohen, J. (1998). Statistical Power Analysis for the Behavioral Sciences, 2nd Edition, Lawrence Erlbaum Associates, Hillsdale.
11. Creswell, J. W. (2007), .Qualitative inquiry and research design: Choosing among five approaches, (2nd ed.). Sage Publications, Inc.
12. Dechow, P. M., Sloan, R. G., Sweeney, A. P. (1995). Detecting Earnings Management, The Accounting Review, 70 (2), pp. 193-225.
13. Di Meo, F., GarcíaLara, J. M., Surroc, J. A. (2017). Managerial entrenchment and earnings management, Journal of Accounting and Public Policy, 36 (5), pp. 399-414.
14. Fakhari, H., Salmani, D. and Daraei, R. (2013). The Impact of economic sanctions on the knowledge-based companies in Iran. Journal of science and technology policy, 5(3). pp. 1-16 (In Persian).
15. GarciaOsma, B., Gomez-Conde, J. and Lopez-Valeiras, E. (2020). Management Accounting and Control Systems and Earnings Management: Effects on Future Firm Performance. SSRN Electronic Journal, Working paper, Getafe, Spain. http://dx.doi.org/10.2139/ssrn.3449178
16. Gordon, M. M. (1964). Assimilation in American Life: The Role of Race, Religion, and National Origins. Oxford: Oxford University Press on Demand.
17. Hair, J. F., Hult, G. T. M., Ringle, C. M. and Sarstedt, M. (2014a). A Primer on Partial Least Squares Structural Equation Modeling(PLS-SEM), SagePublications, Inc, Thousand Oaks, California
18. Hair, J. F., Sarstedt, M., Hopkins, L., Kuppelwieser, V. G. (2014b). Partial least squares structural equation modeling (PLS-SEM): An emerging tool in business research. European Business Review, 26(2), 106-121. https://doi.org/10.1108/EBR-10-2013-0128
19. Hair, J. F., Sarstedt, M., Pieper, T. M. and Ringle, C. M. (2012). The use of partial least squares structural equation modeling in strategic management research: a review of past practices and recommendations for future applications. Long range planning, 45(5-6), pp. 320-340.https://doi.org/10.1016/j.lrp.2012.09.008
20. Hair, J. F. (2011). Multivariate data analysis: An overview. International encyclopedia of statistical science, 904-907.
21. Harris, O., Karl, J. B. and Lawrence, E. (2019). CEO compensation and earnings management: Does gender really matter?. Journal of Business Research, 98(14), pp. 1-14. https://doi.org/10.1016/j.jbusres.2019.01.013
22. Henseler, J., Ringle, C. M. and Sarstedt, M. (2015). A new criterion for assessing discriminant validity in variance-based structural equation modeling. Journal of the academy of marketing science, 43(1), pp. 115-135.https://doi.org/10.1007/s11747-014-0403-8
23. Henseler, J., Ringle, C.M. and Sinkovics, R.R. (2009). The use of partial least squares path modeling in international marketing, New Challenges to International Marketing (Advances in International Marketing), 20(Emerald Group Publishing Limited, Bingley), pp. 277-319. https://doi.org/10.1108/S1474-7979(2009)0000020014
24. Hosseini, E., Saeida Ardekani, S., Sabokro, M. and Salamzadeh, A. (2022), The study of knowledge employee voice among the knowledge-based companies: the case of an emerging economy, Revista de Gestão, 29(2), pp. 117-138. https://doi.org/10.1108/REGE-03-2021-0037
25. Holton, J. A. (2010). The Coding Process and Its Challenges, The Grounded Theory Review, 9(1).
26. Jensen, M. C. and Meckling, W.H. (1976) Theory of the Firm: Managerial Behavior, Agency Costs and Ownership Structure. Journal of Financial Economics, 3, pp. 305-360.
27. Jensen, M. C. and Murphy, K. J. (1990). Performance Pay and Top-Management Incentives, Journal of Political Economy, 98 (2), pp. 225-264.
28. Jiao, T., Mertens, G. andRoosenboom, P. (2007). Industry valuation driven earnings management (pp. 1-44). ERIM Report Series Research in Management, Working paper, Netherlands, Europe
29. Jorissen, A., Lybaert, N. and Van de Poel, K. (2006). Lobbying towards a global standard setter-do national characteristics matter?: an analysis of the comment letters written to the IASB. International Accounting: standards, regulations and financial reporting, Amsterdam, Netherlands, pp. 1-40
30. Jones, J. J. (1991). Earnings Management During Import Relief Investigations, Journal of Accounting Research, 29(2), pp. 193-228
31. Kim, K.S., Lee, J.H. and Park, Y.W. (2022). Acquiring firms' earnings management in stock-for-stock mergers within Korean business groups, Managerial Finance, 48(1), pp. 27-48. https://doi.org/10.1108/MF-05-2020-0262
32. Kong, G. (2022). Causal effects of corporate taxes on private firms' earnings management: a regression discontinuity analysis, China Finance Review International, ahead-of-print. https://doi.org/10.1108/CFRI-10-2021-0210
33. Koolivand, A., Salehi, M., Arabzadeh, M. and Ghodrati, H. (2021). The relationship between knowledge-based economy and fraudulent financial reporting, Journal of Facilities Management, ahead-of-print. https://doi.org/10.1108/JFM-07-2021-0076
34. Lin, B. and Wu, N. (2022). Do heterogeneous oil price shocks really have different effects on earnings management?. International Review of Financial Analysis, 79(28), A. 102006.https://doi.org/10.1016/j.irfa.2021.102006
35. Lin, Y. M. and Shen, C. A. (2015). Family firms' credit rating, idiosyncratic risk, and earnings
management. Journal of Business Research, 68(4), pp. 872-877.https://doi.org/10.1016/j.jbusres.2014.11.044
36. Mangala, D. and Dhanda, M. (2021). Earnings management and listing day performance of IPOs in India, Journal of Accounting in Emerging Economies, ahead-of-print. https://doi.org/10.1108/JAEE-01-2021-0032
37. Mangala, D. and Singla, N. (2021). Do corporate governance practices restrain earnings management in banking industry? Lessons from India, Journal of Financial Reporting and Accounting, ahead-of-print. https://doi.org/10.1108/JFRA-02-2021-0060
38. Honcharenko, M).2019(. Formation of an Earnings Management Mechanism for Commercial Enterprises, Accounting and Finance, Institute of Accounting and Finance, Working papers, Kharkiv, Ukraine, pp. 154-158
39. Mohammadkazemi, R., Talebi, K. and Davari, A. (2021). Investigating the Impact of business model innovation on creation of competitive advantage with the mediating effects of entrepreneurial empowering (Case Study: ICT-Based Knowledge-Based Companies). Journal of Entrepreneurship Development, 14(2), pp. 321-329 (In Persian).
https://dx.doi.org/10.22059/jed.2021.315134.653534
40. Moisio, S. (2018). Geopolitics of the knowledge-based economy. Taylor & Francis.Helsinki, Finland
41. Octaviani, S. and Kartikaningdyah, E. (2019). Effect Of Corporate Governance (Woman's Executive Board), Company Size And Leverage On Profit Management. Journal of Applied Managerial Accounting, 3(1), pp. 51-65.https://doi.org/10.30871/jama.v3i1.955
42. Oktaviani, M. and Mochklas, M. (2020). Free Cash Flow, Size, and Earning Management. Advances in Social Science, Education and Humanities Research, 436, pp. 62-65.
43. Osma, B. G., Gomez-Conde, J. and Lopez-Valeiras, E. (2022). Management controlsystems and real earnings management: Effects on firm performance. Management Accounting Research, 55(2), A.100781.https://doi.org/10.1016/j.mar.2021.100781
44. Rezaei Lashkjany, H., Samadi Largani, M. (2017). A Comparative Study of the Relationship between Real Earnings Management and Earnings Management Based on Accruals to Achieve an Average Profitability, International Journal of Finance and Managerial Accounting, 2(7), pp.41-53.
45. Roychowdhury, S. (2006) Earnings management through real activities manipulation, Journal of Accounting and Economics, 42(3), pp. 335-370
46. Scott, W. R. (2015). Financial Accounting Theory, Seventh Edition, Prentice-Hall, Toronto,
Canada.
47. Skrodzka, I. (2016). Knowledge-based economy in the European Union–Cross-country analysis. Statistics in Transition New Series, 17(2), pp. 281-294. https://doi.org/10.21307/stattrans-2016-019
48. Strauss, A. L., Corbin, J. M., Niewiarra, S. andLegewie, H. (1996). Grounded theory:
Grundlagenqualitativersozialforschung. Weinheim: Beltz, Psychologie-Verlag-Union.Germany
49. Tabassum, N., Kaleem, A. and Nazir, M. S. (2015). Real earnings management and future performance. Global business review, 16(1), pp. 21-34.https://doi.org/10.1177%2F0972150914553505
50. Viana Jr, D.B.C., Lourenço, I. and Black, E.L. (2022). Does national ethical judgement matter for earnings management?, Sustainability Accounting, Management and Policy Journal, 13(2), pp. 519-543. https://doi.org/10.1108/SAMPJ-04-2021-0149
51. VrdoljakRaguž, I., BorovacZekan, S. and Peronja, I. (2017). Knowledge as a source of competitive advantage in knowledge-based companies. DIEM: Dubrovnik International Economic Meeting, 3(1), pp. 533-544
52. Watts, R. L., Zimmerman, J. L. (1990). Positive Accounting Theory: A Ten Year Perspective, The Accounting Review, 65 (1), pp. 131-156.
53. Zalata, A. M., Ntim, C. G., Alsohagy, M. H. and Malagila, J. (2022). Gender diversity and earnings management: the case of female directors with financial background. Review of Quantitative Finance and Accounting, 58(1), PP. 101-136.https://doi.org/10.1007/s11156-021-00991-4
54. Zamora, V. L. (2012). Using a Social Enterprise Service-Learning Strategy in an Introductory Management Accounting Course, Issues in Accounting Education, 27 (1), pp. 187–226.