Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange

The conflict of interest between managers and stockholders is one of the salient matters in economics, finance and accounting. One of the ways for resolving this conflict is the timely loss recognition. Many factors have impact on timely loss recognition. In this paper, we investigated the effect of...

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Autores principales:	Ali Rahmani, Hojatolah Farzani, Hiva Rastegarmoghadam
Formato:	article
Lenguaje:	FA
Publicado:	Shahid Bahonar University of Kerman 2011
Materias:	ownership structure cash flow rights conservatism Accounting. Bookkeeping HF5601-5689
Acceso en línea:	https://doaj.org/article/cf880458725945a5b42014a0618e446c
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spelling	oai:doaj.org-article:cf880458725945a5b42014a0618e446c2021-11-04T19:41:02ZRelationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange2008-89142476-292X10.22103/jak.2011.19https://doaj.org/article/cf880458725945a5b42014a0618e446c2011-04-01T00:00:00Zhttps://jak.uk.ac.ir/article_19_12bc734004070edb0aa8fbf7ad8af309.pdfhttps://doaj.org/toc/2008-8914https://doaj.org/toc/2476-292XThe conflict of interest between managers and stockholders is one of the salient matters in economics, finance and accounting. One of the ways for resolving this conflict is the timely loss recognition. Many factors have impact on timely loss recognition. In this paper, we investigated the effect of ownership structure on Earnings conservatism, and analyzed whether the extent of timely loss recognition shown by firms with a controlling owner for the purpose of decreasing the information asymmetries depends on 1) the ownership share of controlling owner and 2) the divergence between controlling owner's voting and cash flow rights. In this paper, we have used an extension of the regression proposed by Basu (1997) for analyzing the data and 56 companies during 2005-09 from database. In general, our results document a negative relationship between the ownership share of controlling owner and the level of earnings conservatism and this result is consistent with the reduction of external contracting. In addition, we also find a negative relationship between earnings conservatism and the divergence of controlling owner's voting and cash flow rights. By increasing this divergence, firm is confronted with higher costs of external contracting.Ali RahmaniHojatolah FarzaniHiva RastegarmoghadamShahid Bahonar University of Kermanarticleownership structurecash flow rightsconservatismAccounting. BookkeepingHF5601-5689FAمجله دانش حسابداری, Vol 2, Iss 6, Pp 43-63 (2011)
institution	DOAJ
collection	DOAJ
language	FA
topic	ownership structure cash flow rights conservatism Accounting. Bookkeeping HF5601-5689
spellingShingle	ownership structure cash flow rights conservatism Accounting. Bookkeeping HF5601-5689 Ali Rahmani Hojatolah Farzani Hiva Rastegarmoghadam Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange
description	The conflict of interest between managers and stockholders is one of the salient matters in economics, finance and accounting. One of the ways for resolving this conflict is the timely loss recognition. Many factors have impact on timely loss recognition. In this paper, we investigated the effect of ownership structure on Earnings conservatism, and analyzed whether the extent of timely loss recognition shown by firms with a controlling owner for the purpose of decreasing the information asymmetries depends on 1) the ownership share of controlling owner and 2) the divergence between controlling owner's voting and cash flow rights. In this paper, we have used an extension of the regression proposed by Basu (1997) for analyzing the data and 56 companies during 2005-09 from database. In general, our results document a negative relationship between the ownership share of controlling owner and the level of earnings conservatism and this result is consistent with the reduction of external contracting. In addition, we also find a negative relationship between earnings conservatism and the divergence of controlling owner's voting and cash flow rights. By increasing this divergence, firm is confronted with higher costs of external contracting.
format	article
author	Ali Rahmani Hojatolah Farzani Hiva Rastegarmoghadam
author_facet	Ali Rahmani Hojatolah Farzani Hiva Rastegarmoghadam
author_sort	Ali Rahmani
title	Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange
title_short	Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange
title_full	Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange
title_fullStr	Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange
title_full_unstemmed	Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange
title_sort	relationship between ultimate ownership and earnings conservatism in listed companies of tehran stock exchange
publisher	Shahid Bahonar University of Kerman
publishDate	2011
url	https://doaj.org/article/cf880458725945a5b42014a0618e446c
work_keys_str_mv	AT alirahmani relationshipbetweenultimateownershipandearningsconservatisminlistedcompaniesoftehranstockexchange AT hojatolahfarzani relationshipbetweenultimateownershipandearningsconservatisminlistedcompaniesoftehranstockexchange AT hivarastegarmoghadam relationshipbetweenultimateownershipandearningsconservatisminlistedcompaniesoftehranstockexchange
_version_	1718444677943787520

Relationship between Ultimate Ownership and Earnings Conservatism in listed Companies of Tehran Stock Exchange

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