Mahdi Ghaemi Asl; sadegh bafandeh imandoust
Abstract
Extended abstract
1- INTRODUCTION
Accounting information in financial markets is used as a basis for capital allocation decisions. As a result, the effects and consequences of accounting information quality are of interest to investors, managers, legislators, and standards developers. Separation ...
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Extended abstract
1- INTRODUCTION
Accounting information in financial markets is used as a basis for capital allocation decisions. As a result, the effects and consequences of accounting information quality are of interest to investors, managers, legislators, and standards developers. Separation of ownership from control in companies leads to information asymmetry between owners and managers. In addition, the theory of rational expectations and the theory of agency show that owners (investors) and agents (managers) have different interests that cause information asymmetry of the type of moral hazard. Control over the cost of borrowing contracts and debt deferral costs are effective incentives in earnings management. Opportunistic managers are therefore motivated to manipulate or manage profits to reduce the likelihood of breach of debt. Also, when business units fluctuate economically and are under adverse pressures, managers try to adjust the company's situation directly or indirectly to affect the amount of profit reflected in the financial statements and cause a positive outlook. Be users of financial statements, especially investors. The set of these measures is interpreted as profit management, which has both positive and negative aspects. The main question of this research, which has an exploratory approach, is which of the profit management tools in the banking system are mainly used by the managers of Iranian banks?
2- THEORETICAL FRAMEWORK
The issue of profit management in accounting was formed from the beginning of the twentieth century onwards by various researches by accounting experts. Each of these researches has dealt with the subject from specific dimensions and with different expressions such as profit manipulation, profit smoothing and finally profit management. Jensen and McLean have proposed the theory of representation; they defined corporate executives as "agents" and shareholders as "agents". One of the main hypotheses of agency theory is that "agents" and "agents" have conflicting interests and that agents do not necessarily make decisions in favor of agents. According to them, management motivations are in the direction of personal interests, which are the opposite of maximizing the wealth of shareholders. Bank managers, like managers in other industries, have incentives to adjust profits and maximize the wealth of the bank or the manager himself. The only difference is in the methods used to employ the tools in profit management. Of course, since the banking industry is heavily controlled and supervised, it is less likely to manage profits. Nevertheless, concerns about the issue of profit management in banks have received widespread attention in recent years, following the revelation of the collapse and the banking crisis.
3- METHODOLOGY
This research is an applied research and in terms of inference method, it is a descriptive-analytical research. In this research, Kasnik model and special regression methods of unbalanced panel data have been used to calculate and evaluate earnings management in the banking system. In this study, the Cornet model has been used to identify the tools used by bank managers to manage profits. Summarizing the various views on earnings management, it can be interpreted that earnings management is any change, whether a decrease or increase in the reported earnings of the firm without creating appropriate cash flows by management and with the aim of influencing the decision of users of financial statements, including the government and regulatory bodies or investors and shareholders and the company's internal assemblies, financing institutions or other creditors and stakeholders.
4- RESULTS & DISCUSSION
In this section, the results obtained during econometric operations in accordance with the research stages are reported. Considering the continuous trend for each of the sample banks, it can be concluded that mainly bank managers use profit management in one direction for several consecutive years. Of course, this trend is not true for all sample banks; but most sample space banks have followed suit. After estimating the Cornet model, the overall significance of the model and the individual coefficients of the variables have been investigated and confirmed. According to the calculations, the variable cost of doubtful receivables with a coefficient (-0.81) compared to the variable income from investments with a coefficient (0.228) has a stronger effect on the earnings management index and to reduce it. Therefore, the cost of doubtful receivables is introduced as a major tool used by bank managers to manage profits in the Iranian banking system.
5- CONCLUSIONS & SUGGESTIONS
In this research, two goals have been pursued; The first goal, which was to study the earnings management index in the banking system, was estimated using the Kasnik model and by analyzing the trend of changes in optional accruals, the hypothesis of using earnings management methods by bank managers was confirmed. The second purpose of this study was to identify the tools used by bank managers to manage profits and to introduce the main variable used by managers. This goal was achieved by estimation the current model between earnings management index as a dependent variable and LLP and STGL variables as independent variables. The results indicate that the variable cost of doubtful receivables (LLP) has much more application in earnings management by bank managers in the Iranian banking system than the variable income from investments and contributions (STGL). In view of the above, it is recommended that regulatory bodies in the banking industry, such as the Central Bank, the Monetary and Credit Council, as well as statutory auditors or internal auditors of banks and credit institutions, focus more closely on the reported amount of doubtful receivables. On the other hand, the owners of investment accounts do not have direct access to the bank's performance information, and yet their final return depends on the bank's performance. Therefore, depositors must also receive a separate report in order to perform the managerial duty of management.
sadegh bafandeh imandoust; m lashkary; Malihe YaqubZadeh
Abstract
Introduction
Capital market is a link between monetary market and financial market. One of the causes of backwardness of the country in economic growth and development discussion, is the weakness and immortality of the capital market, and economic instability, sensitive capital market, lack of financial ...
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Introduction
Capital market is a link between monetary market and financial market. One of the causes of backwardness of the country in economic growth and development discussion, is the weakness and immortality of the capital market, and economic instability, sensitive capital market, lack of financial knowledge and investor skill, constitute a bitter humor which will reveal a true view of the current market situation. An example of the other factors affecting economic growth is increased participation of specialized workforce. Acquiring knowledge and skill, specifically deep work, will be achieved by continuous and concentrated study together with gaining experience. Given high rate of unemployment in the country, especially, in the educated class who is not able to identify and create logic relationship between invisible circles of education, skill and specialty, and knowing the fact that in the information age, and in view of hard conditions of employment, there is no place for civil servant thinking, to get rid of this vortex of thought and to breed entrepreneurship and investment thinking, with the aim of motivating this class of the society, in this study, one of the comprehensive and successful scientific methods derived from two American and Japanese strategies with an applied aspect and in decision-making discussion, portfolio selection and management is efficient in the capital market, is presented and studied.
Theoretical frame work
Thinking that the audience of this method is the public with any amount of capital, O'Neill (inventor of CAN SLIM strategy); and thinking that this system is efficient in different intervals, Guichi Husuda (Ichimoku designer), have designed it. This comprehensive system will be problematic when it is used as an analytical device by those investors who lack the knowledge and skill required for correct analysis.
Given the fact that O'Neill strategy like Warren Buffett (capital market prodigy), focuses on one or two preferred companies in a long-term period (focused investment), and knowing that fundamental way has a crucial role in Buffet strategy and O'Neill strategy, thought O'Neill thinking most tends to have a growth and quality approach, and in Buffet strategy, value and quality method is most observed, considering the thinking of these two scholars, the dependent variable is PEG.
This ratio is among the main indices of investment of GARP (growth at reasonable price). This investment method is between value method and growth method (Warren Buffett and O'Neill thinking). In Garp's method, investor searches for the stock whose market value is slightly less than intrinsic value, as well as has a stable and sustainable growth potential. In fact, in this method, investor searches for the stock with both its price and future growth is in a more balanced state than value and growth methods.
Methodology
In Section 1 of the study, the relationship between CAN SLIM criteria and the ratio of price to earnings to growth rates (PEG) is studied.
In this part, the relationship between this ratio as a fundamental factor that in its structure dividend growth rate is considered as an essential factor, and CAN SLIM strategy as a combination of fundamental model (with the idea of growth and qualitative investment) and technical model, is evaluated. The case study includes all base materials production industries (chemicals, basic metals, metal minerals) in Tehran Stock Exchange and OTC during 2013-2017, which is based on multivariable regression analysis-based correlation based on panel and cross-sectional data. Explanatory variables of this study include seasonal earnings growth, mean five-year earnings growth, return on equity ratio, return on asset ratio, new high price, percentage of floating stock, Beta coefficient, number of legal purchase days (min 70%).
Eviews version 9 software was used to test the hypotheses.
In Section 2 of this study, top-performing stock is selected based on CAN SLIM strategy and then, reasonable time for inclusion and exclusion of such stock is determined based on Ichimoku Clouds transaction system (Tenkan Sen / Kijun Sen Crossover Strategy). Finally, using Pearson coefficient, the relationship between stock price at the time of determination (inclusion and exclusion) and return on stock is determined.
As the purpose of investment is to earn profit, in this part seasonal and annual return on the selected stock are analyzed and evaluated with seasonal and annual return on stock of 3 well-known indices of the market (cap-weighted index, weighted price index, and index of 50 active companies).
Results & Discussion
According to the results of hypothesis testing in Section I of this study, the hypotheses 1 and 3 are confirmed.
Hypothesis 1 of this study indicates that:
There is a direct relationship between the growth of seasonal EPS more than 20% and PEG ratio.
Given the fact that value of F statistic and probability value for the overall model is 104.239 and 0.0000, respectively, meaning that the model is significant overall (because the probability value of this statistic is less that significant level 0.05), the determination coefficient is 0.405. Therefore, this hypothesis is confirmed.
Hypothesis 3 of this study indicates that:
There is a direct relationship between the efficiency of management; and new high price and PEG ratio.
In this hypothesis, the increased return on assets is used to evaluate efficiency of management in the operational section.
Given the fact that value of F statistic and probability value for the overall model is 3.327 and 0.046, respectively, meaning that the model is significant overall (because the probability value of this statistic is less that significant level 0.05), the determination coefficient is 0.152. Therefore, this hypothesis is confirmed.
In Section 2 of this study, Correlation coefficient -0.99, indicating that there is a complete and reverse relationship between stock price in the time of inclusion and return on stock. Finally, seasonal and annual return on the selected stock are analyzed and evaluated with seasonal and annual return on stock of 3 well-known indices of the market. The result indicates that return on the selected stocks, according to CAN SLIM strategy, is significantly more superior than return on stock of the three indices.
Given the results from this applied study, it sounds that as capital market is raging in Iran especially the stock market, if the investment process is based on fully scientific and empirically validated models, by avoiding emotional behaviors and managing time and setting the appropriate loss limit, a remarkable long-term return will be achieved.
Conclusions & Suggestions
In Section 1 of this study, the relationship between CAN SLIM criteria and the ratio of price to earnings to growth rates (PEG) is studied. the results of the test represent a direct significant relationship (5% level) between seasonal earnings growth; increase return on asset; and new high price and PEG ratio.
Considering the practical result of Section 2 of this study, O'Neill thinking, that is, selection of only one stock and design of CANSLIM model which results in section of leading stocks, is met. In the discussion of return on selected stocks, that is, a big return more than that of the stock market, comparing the seasonal and annual return of top stocks (Zagros Petrochemical) with the seasonal and annual return of 3 well-known stock market indices, this hypothesis is confirmed as well.
Based on the result of Ichimoku cloud analysis, it is found that within a year (1396 corresponding to March 21, 2017 to March 20, 2018), Zagros shares have not issued a strong output signal. So, O'Neill time thinking indicating a long-term investment, is met according to this study.
To promote the capital market, under the Principle 44, one of the strategies for structural modifications in the capital market which the Government can use in its executive policies plan, is to perform the policy of privatization with the aim of increasing efficiency and productivity of the firms in microeconomic level and to accelerate economic growth through decreasing financial and managerial load of the Government in macroeconomic level. In addition, performing the monetary policies through macroeconomic variables (bank interest rate, exchange rate, money supply etc.) as the variables affecting total stock index, capital mobility and the effect of releasing of the financial market on better performance of the capital market are examples of the other executive solutions of the Government towards promotion of capital market level.
The first step a beginner investor should take for entering capital markets is to correctly know him/herself and capital market (financial and behavioral). In this course, training; planning; relying on his/her lessons; paying attention to the news and avoiding rents and rumors and its margins, and finally, continuous and concentrated movement in this respect, will create a healthy atmosphere and better tomorrow for the capital market and will be the basis for one's success.
sadegh bafandeh imandoust; Zahra Shaterian; Seyed Mohammad Fahimifard
Abstract
Credit is an important policy instrument that can facilitate the application of modern technologies and increase the production, especially in developing countries. Credit is also a key to poverty reduction, livelihood diversification, and increasing the business skills of small farmers. Keshavarzi banks, ...
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Credit is an important policy instrument that can facilitate the application of modern technologies and increase the production, especially in developing countries. Credit is also a key to poverty reduction, livelihood diversification, and increasing the business skills of small farmers. Keshavarzi banks, with more than seven decades of experience, are specialized institutions that provide the majority of credits for the development of the agricultural sector in Iran. These banks aim to enhance agricultural productions and fair distribution of income by granting loans to the farmers.
One of the important issues in bank lending is the probability of loan default. Many factors affects the default of bank loan default which their assessing will reduce the credit risk and improve the process of loan endowment. Agricultural lending involves giving out of credit (in cash and kind) to small- scale farmers for the purpose of farming. There is no doubt about the crucial roles of credit in economic development. Agricultural household models suggest that farm credit is not only necessitated by the limitations of self-finance, but also by uncertainty pertaining to the level of output and the time lag between input and output. Recent studies show that the growth rate of investment in agriculture is less than other economic sectors. So, financing agriculture is one of the most important factors to develop rural areas in developing countries. Banking system payment is a way of financing. Generally, credit accessibility is important for the improvement of quality and quantity of farm products, so that it can increase farmer’s’ income and reduce the rural migration. The present paper tries to find the effective factors on bank loan recovery rate of Keshavarzi bank of Khorasan Razavi province-Iran through Tobit econometrics model.
Methodology
The Tobit model is a statistical model proposed by James Tobin (1958) to describe the relationship between a non-negative dependent variable and an independent variable (or vector) . The term Tobit was derived from Tobin's name by truncating and adding -it by analogy with Probit model.
The model assumes that there is a latent (i.e. unobservable) variable *. This variable linearly depends on via a parameter (vector) \beta which determines the relationship between the independent variable (or vector) and the latent variable * (just as in a linear model). In addition, there is a normally distributed error term to capture random influences on this relationship. The observable variable is defined to be equal to the latent variable whenever the latent variable is above zero and zero otherwise.
Therefore, in this research, the effective factors on loan recovery rate with the case study of Keshavarzi bank of Khorasan Razavi province-Iran and through Tobit econometric model were studied.
For this purpose, using Cochran's random sampling, 215 customers which part of their loan from mentioned bank encountered with default were selected and the required data was gathered.
Results and Discussion
Results of the estimated Tobit model using STATA software showed that loan size has the weak direct, rate of loan payment has the not significant effect, length of loan payment has the strong direct, guarantee has the positive, assurance has the negative, natural accident has the inverse and loan payment deadline coincident with the sale season has the strong direct effect on loan recovery rate.
Conclusion
Empirical results of this study highlight the importance of taking into account factors including interest rate, loan size, type of guarantor, extension of the loan and loan payment deadline coincident with the sale season. Therefore, it is recommended to the policy makers and agricultural banks to consider a comprehensive credit risk management process to monitor and control credit risks for reducing the risk of delinquencies and defaults. And also try to allocate the lending to the farmers which have off-farm incomes and activities. In addition, it seems necessary to ask the loan applicants to provide appropriate collateral and to enforce loan repayment obligations for effective credit delivery to the agricultural sector.
Therefore, most of the factors are easily achievable and should be utilized by policy makers in Khorasan Razavi province.
