In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
428
Compa ing Rela ionship be ween Quali y o
Ea ning and S ock Re u n o Companies Lis ed
in Teh an S ock Exchange
Meh noosh Eb ahimi
M.S. S uden and Membe o Young Resea che s and Eli es, Islamic Azad
Uni e si y, Islamshah B anch, Islamshah , I an
Asgha Asadi
1
Assis an p o esso , Islamic Azad Uni e si y, Fi oozkouh B anch, Fi oozkouh,
I an
Hamid Reza Ko dlouie
Assis an p o esso , Islamic Azad Uni e si y, Islamshah B anch, Islamshah ,
I an
Abs ac
In his esea ch, ole o acc uals in desc ip ion o ea ning quali y o he
companies lis ed in Teh an S ock Exchange has been s udied and ela ionship
be ween quali y o ea ning, h ough acc uals and i s cons i uen s, and no mal
s ock e u n has been s udied. Co ela ion analysis and his o ical in o ma ion o
he companies used as he esea ch me hod. The s a is ical sample includes 109
companies in Teh an S ock Exchange du ing 2009-2013. Fo da a analysis and
hypo hesis es ing, Mul iple Linea Reg ession Model based on panel da a has
been used wi h Es ima ed Gene alized Leas Squa e (EGLS) by applying E iews
and S a a so wa es. Th ee hypo heses we e de eloped o de e mine ela ionship
be ween ea ning quali y and s ock e u n. Resul s o he esea ch indica ed ha
he e is a di ec and signi ican ela ionship be ween acc uals and no mal s ock
e u n in Teh an S ock Exchange. No signi ican ela ionship was ound be ween
non-disc e iona y acc uals and no mal e u n.
Keywo ds: Quali y o ea ning, abno mal s ock e u n, acc uals,
disc e iona y acc uals and non-disc e iona y acc uals.
Ci e his a icle: Eb ahimi, M., Asadi, A., & Ko dlouie, H. R. (2015). Compa ing
Rela ionship be ween Quali y o Ea ning and S ock Re u n o Companies Lis ed in Teh an S ock
Exchange. In e na ional Jou nal o Managemen , Accoun ing and Economics, 2(5), 428-443.
1
Co esponding au ho ’s email: Asgha 20a[email p o ec ed]
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
429
In oduc ion
Use s o inancial s a emen s such as manage s, inancial analys s and in es o s pay
mo e a en ion o he ea ning epo s o companies and ollow hei bene i s. Fo example,
mos manage s y o p ese e and inc ease hei ewa d and income which a e usually
ela ed o ea ning o he company by keeping g owing end o ea ning. P ope
unde s anding o he epo ed ea ning quali y is impo an in playing his ole op imally
o inancial analys s who y o p ocess and in e p e in o ma ion. Publica ion o good
news abou ea ning o companies has conside able e ec on s ock p ice and i is wo h
no ing ha ocus o ma ke on ne p o i conside ably educes a en ion o o he
pe o mance indica o s o companies. Conside ing ha es ima ions has ema kable ole
in accoun ing p ocess and his ac o can be used as a ool o di ec ional compu a ions.
I should be ound i ne p o i was he inal esul o accoun ing p ocess o he manage s.
E alua ion o ea ning quali y will help use s o inancial s a emen s ha ing p ope
judgmen and e alua ion o he ea ning in he cu en pe iod and es ima ion o he u u e
ea nings.
Ea ning quali y has been s udied in many pape s and discussions in ecen yea s.
Ea ning quali y is an impo an issue in inancial epo ing which a ec s us o in es o s
in capi al ma ke . Role o acc uals in p edic ion o he u u e cash lows is an essen ial
ques ion abou inancial epo ing. Conside ing ha acc uals a e empo a y adjus men s
which sol e p oblems ela ing o iming o ac ual cash lows and change o co ec
iden i ica ion o cash lows. The highe he quali y o acc uals, he be e he iden i ica ion
o cash lows ela ing o hem and he be e he p edic ion o u u e ea nings. In he cases
ha he epo ed ea nings o company a e pe sis en and ha e signi ican ela ionship wi h
he u u e cash lows o company, he ea nings will be ega ded as high quali y ea nings
and disclosu e o high quali y ea nings along wi h eac ion o in es o s lead o change in
s ock p ice.
In his esea ch, e ec o acc uals, which ha e been de ined as di e ence be ween
accoun ing ea nings and cash lows, on ea ning quali y o he companies lis ed in Teh an
S ock Exchange is s udied. Acc uals a e di ided in o disc e iona y and non-disc e iona y
componen s. Fu he , Rela ionship be ween s ock e u n and acc uals and i s ela ed
componen s is s udied.
S a emen o he p oblem
Sha eholde s and in es o s should conside quali y in de e mina ion o co po a e alue
in addi ion o ea ning quali y. Ea ning quali y means closeness o cash und, g ow h and
con inui y. In o he wo ds, sha e p ice o a company doesn’ only depend on di idend o
he cu en yea bu also on ou expec a ions o he u u e o he company and p o i abili y
o he u u e yea s and con idence ac o ela i e o u u e p o i s (Jahankhani and Za i
Fa d, 1995).
Acc uals a e impo an indica o o ecogni ion o he ea ning quali y and a e applied
in alua ion o sha es. Acc uals a e he di e ence be ween accoun ing ea ning o a
company and i s essen ial cash lows. High posi i e acc uals a e de ined as he di e ence
be ween accoun ing ea ning o company and i s essen ial cash lows. High posi i e
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
430
acc uals indica e ha ea nings a e much highe han cash lows o company. This
di e ence is due o iden i ica ion o incomes and p inciple o ma ching. Expe imen ally,
esea che s ha e ound ha ea ning wi h high acc uals shows ha ea nings a e highe
han he cash lows and as a esul , hey will ha e lowe e u n (Ghaemi e al., 2008).
This esea ch deeply s udies p edic ion powe o acc uals o s ock e u n in Teh an
S ock Exchange and he eason o his s udy is ha i s ock e u ns indica e in o ma ion
abou quali y o cu en ea nings o he companies lis ed in Teh an S ock Exchange.
Resea ch goals
In some ecen decades, issue o “ea ning quali y” has a ac ed special a en ion o
specialis s and many a emp s ha e been made o e alua e ea ning quali y by achie ing a
logical and eliable me hodology and iden i y ac o s a ec ing i . Role o acc uals is o
change o co ec iden i ica ion o cash lows and he adjus ed p ices (ea ning) a e be e
c i e ion o measu emen o co po a e pe o mance acco ding o accoun ing concep s
decla a ion No. 1. Anyway, acc uals a e almos based on hypo heses and es ima ions
which should be co ec ed in acc uals and u u e ea ning i hey a e mis aken. The e o e,
quali y o acc uals and ea ning is educed conside ing size o hei es ima ion e o s. In
his esea ch, a emp is made o s udy and compa e ela ionship be ween quali y o
ea ning h ough acc uals and i s cons i uen s and s ock e u n o he companies lis ed in
Teh an S ock Exchange. Since ea ning plays impo an ole in decision-making o use s,
i is hoped ha e alua ion o i s quali y and s udy o i s ela ionship wi h s ock e u n can
help playing his ole be e and inc ease in o ma ion anspa ency o capi al ma ke .
Theo e ical undamen als o esea ch
Quali y o ea ning
In ecen yea s, many s udies ha e been conduc ed by in e na ional p o essional
associa ions on quali y o ea ning, ea ning managemen and he ela ed issues. A e g ea
inancial iascos in ecen yea s occu ed in s ock exchange ma ke s in he wo ld, quali y
o ea ning and inancial epo ing we e conside ed by p o esso s, expe s and p o essional
socie ies. In his ega d, many ac i i ies ha e been conduc ed esul ing in some cases such
as e iew o accoun ing and audi ing s anda ds and in oduc ion and en o cemen o laws
ela ing o co po a e go e nance (Esmaeil Zadeh e al., 2014). Cha ac e is ics o he la ge
companies a e s uc u e o owne ship and sepa a ion o owne ship om managemen .
This means ha sha eholde s don’ apply e ec i e con ol on manage s and as a esul ,
he manage s will be oppo unis ic in achie ing hei special bene i s. Recen accoun ing
iascos in known companies such as En on, Wo ldcom, Taiko, Xe ox and Heal h Sou h
indica e acu e examples o such oppo unis ic beha io s which ha e educed us o
in es o s and exposed manage s and audi o s in he global le el o que ies o legisla o s
(osma e al., 2007). As a esul o hese iascos, many o hese companies expe ienced
decline o alue o hei equi y secu i ies and decline o c edi ank o hei secu i ies
(based on junk bonds). Disclosu e o he ac s ela ing o in alidi y o he epo ed ea ning
is inc easing. Inc ease in equency o ea ning es a emen by companies in ecen yea s
indica ed his claim. Weakness o in e nal con ols is he cause o inabili y in inancial
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
431
epo ing. Conce n abou issues o accoun ing has been he eason o decline o sha e
ma ke a e hese iascos (Eb ahimi and Eb ahimi, 2012).
Two cha ac e is ics ha e been de e mined in di e en pape s o de e mina ion o
ea ning quali y in de ini ion o he quali y o ea ning; one is he decision use ulness and
ela ionship be ween his concep and economic ea ning. Acco ding o Hicks, quali y o
ea ning means hones s a emen o he epo ed ea ning. Hones s a emen means ma ch
be ween he pe o med desc ip ion and wha i claims (concep ual s a emen No. 2,
pa ag aph 63). In o he wo ds, high quali y o ea ning indica es use ulness o ea ning
in o ma ion o decision o he use s and also mo e ma ching wi h economic ea ning o
Hicks bu i is no possible o p o ide comp ehensi e de ini ion o ea ning because people
use in o ma ion in di e en decisions.
Some inancial analys s ega d quali y o ea ning as no mal and con inuing, epea able
ea ning om ope a ion. They belie e ha quali y o ea ning is a igu e be ween epo ed
ne ea ning and cash low om ope a ion minus un epea able igu es.
Financial specialis s couldn’ achie e independen calcula ion o ea ning which a e
hough by hem o ha e necessa y quali y. In his case, inancial specialis s can achie e
he scope which mo e p ope ly indica es quali y o ea ning in ela ion o he epo ed ne
p o i by pe o ming sui able adjus men s. The e o e, concep o quali y o Ea ning is no
a ixed de ined issue which can be achie ed bu a ela i e concei which depends on
ela ionship wi h a i udes (Esmaeil Zadeh e al., 2014).
S ock e u n
One o he impo an in es men s in capi al ma ke is in es men in no mal s ocks.
In es o s should conduc b oad s udies a ime o in es men in no mal s ock. In o he
wo ds, hey should conside di e en ac o s a ime o in es men because hey con e
he cash asse in o no mal s ock. I in es o s in es i espec i e o some ac o s, hey will
no gain desi able esul s om in es men and he e is no need o ex ensi e s udies on
secu i ies in he coun ies whose s ock exchange is e icien because sha e ma ke p ice
is close o ac ual alue o hose secu i ies.
One o he mos impo an goals o he companies is o c ea e alue and inc ease weal h
o sha eholde s in long e m and inc ease o weal h will be caused only by desi able
pe o mance. To e alua e pe o mance o he comme cial uni s, di e en c i e ia ha e
been p esen ed up o now and he mos impo an c i e ion o e alua ion o pe o mance.
P o i abili y o ins i u es is based on s ock e u n a e and has key ole in in es men . This
c i e ion solely has in o ma ion con en o in es o s and is used o e alua ion o
pe o mance and ope a ion o a comme cial uni . When his c i e ion is educed, i is an
ala m o he company and shows ha he pe o mance is no sui able. Pe haps, his
c i e ion has mo e in o ma ion con en han accoun ing-based c i e ia because ma ke -
based pe o mance e alua ion does no e lec in o ma ion o in es o s well.
S ock e u n means a io o s ock p ice changes (s ock p ice changes a he end and
beginning o yea ) di ided by he sha e p ice a he beginning o yea (Mashmool Bonab,
2004).
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
432
P e ious esea ches
Ogne a (2008) in his esea ch s udied ela ionship be ween acc uals quali y and
expec ed e u ns and showed ha he e was a nega i e and signi ican ela ionship
be ween acc uals and u u e s ock e u n. Hi shlei e e al. (2009) s udied ela ionship
be ween quali y o acc uals, cash lows, and agg ega e s ock e u ns. Acco ding o hei
indings, he e is a conside able posi i e ela ionship be ween size o acc uals and s ock
e u n while he e is a nega i e ela ionship be ween size o cash lows and s ock e u n.
Kim e al. (2010) s udied ela ionship be ween quali y o acc uals and s ock e u n and
he e is a posi i e ela ionship be ween quali y o acc uals and s ock e u n. The in la ion
a e was e ec i e on his ela ionship.
Ghaemi e al. (2008) s udied ela ionship be ween ea ning quali y h ough acc uals and
i s disc e iona y componen s and no mal and abno mal s ock e u n. The s udied sample
includes 136 companies in 1998 o 2005. Acc uals ha e been di ided in o disc e iona y
and non-disc e iona y componen s. Resul s showed ha s ock e u n o companies is
a ec ed by acc uals and i s ela ed componen s. In o he wo ds, he e is a signi ican
ela ionship be ween e u ns o he companies whose acc uals a e epo ed o be minimum
and maximum.
Hashemi and Sadeghi (2009) in a esea ch s udied ela ionship be ween disc e iona y
acc uals and s ock e u n and concluded ha he e was signi ican and nega i e
ela ionship be ween hese wo a iables indica ing ha s ock e u n a e o he companies
wi h posi i e and la ge disc e iona y acc uals is lowe han ha o o he companies.
Meh abi e al. (2010) s udied ole o acc uals in elabo a ion o ea ning quali y o
companies lis ed in Teh an S ock Exchange and ela ionship be ween ea ning quali y
h ough acc uals and i s cons i uen s and no mal s ock e u n. The s udied sample
included 109 companies in 2004-2008. Acc uals ha e been di ided in o disc e iona y and
non-disc e iona y componen s. To de e mine ela ionship be ween quali y o ea ning and
s ock e u n, h ee hypo heses had been es ed. Resul s showed ha s ock e u n o
companies was a ec ed by acc uals and i s ela ed componen s. In o he wo ds, he e was
signi ican di e ence be ween e u n o he companies whose acc uals a e epo ed o be
minimum and maximum.
Azimi (2014) wi h a balance shee app oach s udied ela ionship be ween pe sis ence
o acc uals and s ock e u n. In his esea ch, he s a is ical popula ion includes companies
lis ed in Teh an S ock Exchange in 2001 o 2008 and a sample size o 141 companies had
been selec ed. The esea ch indings showed ha he e was no signi ican nega i e
ela ionship be ween acc uals and s ock e u n.
Resea ch hypo heses
In his esea ch, acc uals ha e been conside ed as impo an index o e alua ion o
ea ning quali y in de e mina ion o sha e alue. These acc uals which a e he di e ence
be ween accoun ing ea ning and cash lows a ec ea ning quali y due o he p esence o
p inciples o ealiza ion and ma ching, ading schedule and selec ion o accoun ing
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
433
p ocedu es. Ea ning quali y can be de ined as closeness o company’s ea ning o cash
lows; he e o e, he main hypo hesis is as ollows:
H1: The e is a signi ican ela ionship be ween acc uals and no mal s ock e u n o
he companies lis ed in Teh an S ock Exchange.
The c i e ion o ecogni ion o acc uals o he companies’ ea ning has been conside ed
o be no mal s ock e u n in his esea ch. The mo e (less) he quali y o epo ed acc uals,
he mo e (less) he e u n o hose companies will be p edic ed.
Acc uals a e di ided in o disc e iona y acc uals and non-disc e iona y acc uals and
hei e ec s ha e been sepa a ely es ed wi h no mal s ock e u n. This esea ch has wo
subsidia y hypo heses:
H1a: The e is a signi ican ela ionship be ween disc e iona y acc uals and no mal
s ock e u n o he companies lis ed in Teh an S ock Exchange.
H1B The e is a signi ican ela ionship be ween non-disc e iona y acc uals and
abno mal s ock e u n o he companies lis ed in Teh an S ock Exchange.
Resea ch Scope
The scope o he cu en esea ch includes all companies lis ed in Teh an S ock
Exchange in Islamic Republic o I an. Time scope o his esea ch is a 5-yea pe iod om
2009 o 2013. In o ma ion o he h ee pe iods be o e he base yea is equi ed o calcula e
disc e iona y and non-disc e iona y acc uals acco ding o he p o ided model. The eason
o selec ion o 2013 as he end pe iod is ha he equi ed in o ma ion o collec ion o
da a should be a ailable un il pe o mance o he esea ch by he esea che .
S a is ical sample
The selec ed sample o his esea ch includes 6 indus ies o Teh an S ock Exchange
in which he ollowing limi a ions a e applied:
I includes cemen , pha maceu ical, chemical, oil, au omo i e indus ies and basic
me als.
I should no be pa o in es men companies, banks and inancial media o .
They should be p esen in Teh an S ock Exchange be ween 2009 and 2013.
Due o compa able inc ease, hei inancial pe iod ends o Es and o I anian
companies i s inancial yea has no changed in 2009 o 2013.
Company has con inual ac i i y be ween 2009 and 2013.
Company is p o i able be ween 2009 and 2013.
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
434
In he selec ed indus ies, sys ema ic e iew me hod is used by applying limi a ions. I
means ha all companies o he selec ed indus ies which a e quali ied o he abo e
condi ions and c i e ia a e ega ded as s a is ical sample and he companies which a e no
quali ied o he abo e condi ions a e excluded om he sample.
Me hod o analysis
Da a o his esea ch we e analyzed and i s hypo heses we e es ed wi h Excel, E iews
and S a a so wa e. In his ega d, he in o ma ion p o ided by he da abase has been i s
classi ied and so ed in Excel so wa e and hen ans e ed in o E iews and S a a
so wa e o conduc s a is ical es s on hem. In his esea ch, o es hypo heses, mul iple
linea eg ession model based on panel da a has been used wi h Es ima ed Gene alized
Leas Squa e (EGLS) and , F s a is ics and coe icien o de e mina ion (R2) a e used o
s udy o al alidi y o eg ession and jus i ying powe . We desc ibe hese me hods and
hei cha ac e is ics in de ail:
Ope a ional de ini ion o he esea ch a iables and hei measu emen
Each o he a iables has been p esen ed by sepa a ing and classi ying hei ype wi h
hei measu emen me hod:
Dependen a iable o he esea ch
Dependen a iable is he a iable which is a ec ed by independen a iable.
Conside ing he abo e de ini ion and e iew o li e a u e, he dependen a iable in his
esea ch is abno mal s ock e u n o company which is de ined and measu ed as ollows:
No mal s ock e u n
S ock e u n means o al a io o ea ning (loss) ob ained om in es men in a de ini e
pe iod o he capi al which has been spen o gain his ea ning a he beginning o he
spending pe iod. S ock e u n is one o he impo an c i e ia o e alua ion o companies’
pe o mance which is conside ed by in es o s. Re u n on in es men indica es bene i s
ob ained om in es men and in es o s seek o ind in es men oppo uni ies which
inc ease hei capi al e u n. In his esea ch, he ollowing ac ion is pe o med o measu e
no mal s ock e u n (Ghaemi e al., 2008).
No mal s ock e u n =
Ma ke alue a he end o he yea −Ma ke alue a he beggining o he yea +App o ed di idend–Capi al inc ease
Ma ke alue a he beggining o he yea
To calcula e each o he i ems, we ha e:
ma ke alue o he company a he beggining (end) o he yea =
numbe o s ock a he beggining(end)o he yea ×
s ock p ice a he beggining(end)o he yea
App o ed di idend=cash di idend × numbe o s ock a he end o he yea
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
435
Capi al inc ease pe cen om cash con ibu ion and c edi s × ( i s o pe iod capi al-
end o pe iod capi al) = Capi al inc ease om cash con ibu ion and c edi s
Cash di idend: his di idend means cash di idend app o ed in gene al assembly o
sha eholde s o he companies accep ed in Mumbai S ock Exchange.
Capi al inc ease: company wi h capi al inc ease is he company which has inc eased
capi al in 2009-2013. Capi al inc ease om cash con ibu ion and c edi s has been
conside ed in calcula ion o s ock e u n.
Abno mal s ock e u n
To calcula e his a iable, companies o each pe iod a e independen ly classi ied in o
5 classes based on na u al loga i hm o asse s a he end o he inancial yea (co po a e
size) and p ice- o-book a io. Resul o di e ence o hese 10 g oups is 25 s a es. Fo each
g oup wi h he ob ained po olio, mean co esponding e u n was ob ained. The eason
o his classi ica ion is he con ol o e ec o sys ema ic isk wi h co po a e size a iable
because he p esence o signi ican ela ionship be ween co po a e size and sys ema ic
isk has been shown (Namazi and Khaja i, 2004). Anyway, abno mal e u n is equal o
di e ence o e u n o each company and mean po olio e u n o he company in ha
class.
Na u al loga i hm o asse s a he end o he inancial yea = co po a e size
Ma ke alue o he company a he end o he pe iod /company’s capi al a he end o
he pe iod – p ice- o-book a io
Resea ch independen a iables
Independen a iable is a ea u e o physical o social en i onmen which accep s some
alues a e selec ion, in e e ence o al e a ion by he esea che o obse e i s e ec on
ano he a iable. Conside ing he main esea ch ques ion and based on he conduc ed
s udies, independen a iables o he esea ch and hei measu emen me hod a e as
ollows:
Acc uals
Acc uals exp ess he di e ence be ween accoun ing ea ning and cash low om
ope a ion. I means ha la ge posi i e acc uals indica e epo ed excess ea ning ela i e
o cash low p oduced by he company. This di e ence is esul o accoun ing cons ain s
o see when income and cos should be iden i ied (p inciple o ealiza ion and ma ching).
One o he impo an oles o acc uals, ans e o modi ica ion is iden i ica ion o cash
lows o e ime. So, he modi ied numbe s (ea ning) be e e alua es pe o mance o he
company.
Cash low om ope a ion – ope a ing ea ning = acc uals
This alue is in e ms o asse s o sample companies a he end o he s anda d inancial
yea .
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
436
A- Ope a ing p o i : loss o p o i om o dina y and con inual ac i i ies o he
comme cial uni . This alue is also ob ained in e ms o mean o o al asse s om
di ision o p o i ob ained om o dina y and con inual ac i i ies by asse s o he
sample companies a he end o inancial yea . This p ice is ex ac ed om loss and
p o i s a emen p o ided in inancial s a emen s o he companies.
B- Cash low om ope a ion: i is ob ained in e ms o mean o asse s o company which
is ob ained by di iding cash low om con inuing ope a ion by asse s o he sample
companies a he end o he inancial yea . This alue is ex ac ed om cash low
s a emen . In his de ini ion, payable cash und o income ax and e u n on
in es men s and payable p o i o inancing a e no conside ed o he eason o
obse ance o accoun ing s anda ds. This p ice is ex ac ed om cash low s a emen
p o ided in inancial s a emen s o companies.
Disc e iona y and non-disc e iona y acc uals
Disc e iona y and non-disc e iona y acc uals mean o wha ex en he manage s ha e
eedom o ac ion in p epa ing and epo ing hem. Disc e iona y acc uals a e pa o he
acc uals which e lec applica ion o powe by manage in economic se ing o he
company. Non-disc e iona y acc uals mean he acc uals which canno be con olled and
e e o he acc uals which e lec undamen al pe o mance o company.
To calcula e he disc e iona y and nondisc e iona y acc uals, acc uals o e e y yea
should be p edic ed wi h mean o sale and acc uals o he pas h ee yea s such ha :
𝐸𝑡(𝐴𝑐𝑐𝑖𝑡)=∑𝐴𝑐𝑐𝑖𝑡−𝑘
3
𝑘=1
∑𝑆𝑎𝑙𝑒𝑠𝑖𝑡−𝑘
3
𝑘=1
𝑆𝑎𝑙𝑒𝑠𝑖𝑡
𝐸𝑡(𝐴𝑐𝑐𝑖𝑡) = p edic ion o acc uals o company i in pe iod :
𝑆𝑎𝑙𝑒𝑠= co po a e sales and k is 3-yea ime pe iod be o e he desi ed cu en yea .
To calcula e nume a o o he acc uals, we calcula e h ee yea s be o e he desi ed yea
and pu mean o hese h ee numbe s in nume a o o he ac ion. To calcula e domina o
o he ac ion, we conside sales o he pas h ee yea s. Finally, we mul iply he numbe
ob ained om he desi ed ac ion by he cu en yea sales and he esul ing igu e shows
p edic ion o acc uals in he cu en pe iod.
Disc e iona y acc uals
DAi = Acci − E (Acci )
To calcula e he disc e iona y acc uals, we deduce he p edic ed acc uals which we e
calcula ed as abo e om o al acc uals o he cu en yea .
Non-disc e iona y acc uals
NDAi = E (Acci )− Acci −1
In e na ional Jou nal o Managemen , Accoun ing and Economics
Vol. 2, No. 5, May, 2015
ISSN 2383-2126 (Online)
© IJMAE, All Righ s Rese ed www.ijmae.com
443
Meh abi, Minooee, Ab isham Chi, (2010). Quali y o ea ning and s ock e u n o s ock
exchange companies. Business Managemen Jou nal .No. 8, second yea . Win e 2011.
Ogne a, M. (2008). Acc uals quali y and expec ed e u ns: he impo ance o
con olling o cash low shocks. Wo king pape . S an o d Uni e si y
Osma, B. G. and B. Gill-de-Albo noz, N. (2007). “The E ec o he Boa d
Composi ion and i s Moni o ing Commi ees on Ea nings Managemen : E idence om
Spain.” Co po a e Go e nance, Vol. 15, No. 6, PP. 1413−1428.
Quali y o o mula ing accoun ing s anda ds (2007). Accoun ing s anda ds: heo e ical
concep s, inancial epo ing, Teh an: Audi ing O ganiza ion.
Richa dson, J.V. and Waegelein, J. F. (2002), The in luence o Long- e m
pe o mance plans on Ea nings Managemen and Fi m pe o mance , Re iew o
Quan i a i e Finance and Accoun ing,18: 161-183.
Sloan, R. G. (1996). Do s ock p ices ully e lec in o ma ion in acc uals and cash
lows abou u u e ea nings?«, The accoun ing Re iew, No.71, PP 289-315.
Zang, X. F. (2007). Acc uals, in es men and Acc ual Anomaly, The Accoun ig
Re iew, 82: 336-363.
