Effect of Peer Performance, Future Competitive Performance, and Factors of Correlation with Peer Companies on Manipulation of Abnormal Real Operations

Subject Areas : Financial Accounting

Amin  Rahmani ¹ (Department of Accounting, Arak University, Islamic Azad University, Arak, Iran)
Majid  Zanjirdar ² (Department of Accounting, Faculty of Management, Islamic Azad University, Arak Branch, Arak, Iran)
Hamidreza  Ghiabi ³ (Department of Accounting, Faculty of Management, Islamic Azad University, Arak Branch, Arak, Iran)

Received: 2019-08-01 Accepted : 2020-09-24 Published : 2021-01-01

Keywords: Manipulation of Abnormal Real Operations, Factors of Correlation with Peer Companies, Peer Performance Future, Competitive Performance,

Abstract :

This study aimed to evaluate the effect of peer performance, future competitive performance and factors of correlation with peer companies on the manipulation of abnormal real operations. The research subjects included listed companies in Tehran Stock Exchange during 2013-2017. In total, 128 companies were selected as the statistical sample using systematic elimination approach. Peer performance, future competitive performance, and factors of correlation with peer companies were independent variables of the research, whereas the manipulation of abnormal real operations was the dependent variable. This was an applied research in terms of use and a correlational study regarding methodology. Data were collected using the library method, and explanatory notes, financial statements, and monthly journal of stock exchange were considered in the data section. Moreover, descrip-tive and inferential statistics were exploited to describe and summarize the col-lected data. Furthermore, data analysis was performed using variance heterogene-ity tests, F-Limer, Hausman, and Jarque and Bera tests, followed by the applica-tion of the multiple regression test for confirming or rejecting the research hy-potheses (Eviews Software). According to the results of the study, peer perform-ance, future competitive performance, and factors of correlation with peer compa-nies affected the manipulation of abnormal real operations.

References:

[1] Ansari, A., Khorshidi, A., Shirzad, A., The Investigation of Effect of Accruals-based Earnings Management and Real Earnings Management on Stock Liquidity and Firm Value, Journal of Management Accounting and Auditing Knowledge, 2014, 3(11), P. 41-53. (in Persian)

[2] Cohen, D.A, Zarowin, P., Accrual-Based and Real Earnings Management ‎Operations around Seasoned Equity Offerings, Journal of Accounting and Economics, 2010, 50(1), P. 2-19.Doi:10.1016/j.jacceco.2010.01.002

[3] Cupertino C. M., Antonio, L. M., Newton da Costa Jr, Earnings manipulations by real Operations management and investors’ perceptions, Research in International Business and Finance, 2015, 34, P. 309–323, Doi:10.1016/j.ribaf.2015.02.015

[4] Davallou, M., Payesye, A., Relation of Size, Earning Management and Market Timing to the Firm Performance in Seasoned Equity Offerings, 2017, 6(1), P. 189-219, Doi: 10.22051/JERA.2017.9233.1218

[5] Du, Q., Shen, R., Peer Performance and Earnings Management, Journal of Banking and Finance, 2018, 89, P. 125-137, Doi: 10.1016/j.jbankfin.2018.01.017

[6] Graham, J.R., Harvey, C., The practice of corporate finance: Evidence from the field, Journal of Financial Economics, 2001, 60, P. 186–243. Doi: 10.1016/S0304-405X(01)00044-7

[7] Haghighat, H., Rahimpoor, M., Khansari, N., Ghorbani, R., Investigating the Effect of Correlation between Firms' Earnings and Announcement Timing on the Accruals, Scientific Identity ,2017, 14(53), P. 91-112.Doi: 10.22054/qjma.2017.8004

[8] Hoberg, G., Phillips, G., Probhala, N., Product market Threats, payouts, and financial flexibility, Journal of Finance, 2014, 69, P. 293-324. Doi: 10.1111/jofi.12050

[9] Hosseini Nasab, M., Evaluation of Effect of Earnings Management on Firm Performance, The second International Conference on Management, Entrepreneurship, and Economic Development, Qom, Payam-e Noor University, 2013.

[10] Karuna, C., Subramanyam, K.R., Tian, F., Industry Product Market Competition and Earnings Management. Available at SSRN:http G15; F37; M41, 2012.

[11] Kedia, S., Koh, K, Rajgopal, S., Evidence on contagion in earnings management, The Accounting Review, 2015, 90, P. 2337-2373.

[12] Kim, J.B, Sohn, C.B., Real versus Accrual-based Earnings ‎Management and Implied Cost of Equity Capital, SSRN, 2011, P. 1-52. Doi: 10.2139/ssrn.1297938

[13] Laksmana, I, Yang, Y.W., Product Market Competition and Earnings Management to Meet Earnings Targets. Advances in Accounting, Incorporating Advances in International Accounting, 2014, 30, P. 263–275.Doi: 10.1016/j.adiac.2014.09.003

[14] Leary, M.T., Roberts, M.R., Do peer firms affect corporate financial policy? Journal of Finance, 2014, 69, P. 139-178. Doi: 10.1111/jofi.12094

[15] Lee, Y-J., Market reactions to unexpected relative earnings performance, Asia-Pacific Journal of Accounting & Economics, 2017, 24(3-4), P. 339-357. Doi: 10.1080/16081625.2016.1213645

[16] Peasnell, K.V, Pope, P.F., Young, S., Detecting Earnings Management Using Cross-sectional Abnormal Accruals Models, Accounting and Business Research, 2000, 30(4), P. 313–326.Doi: 10.1080/00014788.2000.9728949

[17] Ramzi, B., The effect of relative earnings performance on firms' accrual decisions: Evidence from France, European Journal of Economics, Finance and Administrative sciences, 2006, 6, P. 89-102.

[18] Tavana, M., Izadikhah, M., Di Caprio, D., Farzipoor Saen, R., A new dynamic range directional measure for two-stage data envelopment analysis models with negative data, Computers & Industrial Engineering, 2018, 115, P. 427-448, Doi: 10.1016/j.cie.2017.11.024.

[19] Sadeghipanah, J., Garkaz, M., Alipour, I., Evaluation of Effect of Earnings Management and Financial Leverage on Performance of Basic Metal Industry in Tehran Stock Exchange Market, the First National Conference on the Role of Accounting, Economy, and Management, Tabriz, Shams Higher Education Institute of Science and Technology, 2017.

[20] Saeedi, A., Hamidian, N., Rabiei, H., The Relationship between Real Earnings Management Operations and Future Performance of the Listed Companies in Tehran Stock Exchange, Management Accounting Journal, 2013, 6(17), P. 45-58. (in Persian)

[21] Salehi Kordabadi, S., Yousefi, S., Effect of Corporate Governance on Earnings Management and Financial Performance, Case Study: Insurance Industry of Gilan Province, International Conference on Management of Change, Tehran, Applied Information Development Center, 2016.