Predicting Social Responsibility Reporting using Financial Ratios
Subject Areas : Financial Accounting
Mohammad Javad Zare Bahnamiri
1
(
Department of Accounting, Faculty of Economics and Management,University of Qom, Qom, Iran
)
mahsa golkar
2
(
Department of Accounting, Mehr Qom Higher Education Institute, Qom, Iran
)
niloofar Beiky
3
(
Department of Accounting, University of Qom, Qom,Iran
)
Keywords: Corporate Social Responsibility Reporting, Financial Ratio, Prediction Models.,
Abstract :
The purpose of this research is to investigate the prediction of corporate social responsibility reporting using financial ratios. To answer the research question, four prediction models of linear regression, K Nearest Neighbor, decision tree, and deep learning were investigated. Also, 61 financial ratios were used according to previous research using data related to listed and non-listed companies of Iran from the years 2012 to 2018. According to the re-sults obtained from the estimation of each of the proposed prediction mod-els, it can be stated that the k-nearest neighbor model has the lowest RMSE value, and in fact, this model predicts the amount of social responsibility with less error than other models. The linear regression model with the high-est RMSE value has a weaker performance than other models. LSTM model and decision tree respectively had the lowest RMSE value after the k-nearest neighbor model. As a result, since the LSTM model requires a large number of test sam-ples for deeper learning, it could not achieve high performance in the evaluated data set. Based on the investigations, it can be stated that the current research does not have a similar example inside or outside of Iran.
[1] Bhattacharya, C. B., Korschun, D., Sen, S., Routledge, H., Corporate social responsibility, Journal of International Law, 2017; 26(2).
[2] Tayyebi, M., Hosseini Shakib, M., Mobaleghi, M., The Importance and Role of Social Responsibility and Innovation Performance in the Relationship between Transformational Leadership Style and Corpo-rate Performance. Journal of Development & Evolution Management, 2021; 44: 73-81. (In Persian)
[3] Ahmadi Syah Bumi, M., The effect of corporate social responsibility on competitive performance in companies listed on the Tehran Stock Exchange, Master's thesis, Hasht Behesht Institute of Higher Educa-tion, Isfahan, 2017, (In Persian)
[4] Zolfaghari, M., Ashori Khatibi, N., The Impact of Corporate Social Responsibility on Competitive Suc-cess in Companies listed on Tehran Stock Exchange, Journal of Accounting and Management, 2018; 1(2): 54-67. (In Persian)
[5] Moradi, M. A., Rezaei, M., Investigating the relationship between social responsibility accounting re-porting on organization performance, New researches in management and accounting, 2018; 36(4): 185 198. (In Persian)
[6] Biglarkhani, g., Talebnia, g., The effect of reducing the complexity of financial reporting and earnings management with social responsibility, Journal of Management Accounting and Auditing Knowledge, 2021; 10(38): 183-203. (In Persian)
[7] Delen, D., Kuzey, C., Uyar, A., Measuring firm performance using financial ratios: A decision tree ap-proach. Expert systems with applications, 2013; 40(10): 3970-3983. doi: 10.1016/j.eswa.2013.01.012.
[8] Adam, M. H. M, Evaluating the Financial Performance of Banks using financial ratios-A case study of Erbil Bank for Investment and Finance, European Journal of Accounting Auditing and Finance Research, 2014; 2(6):162-177.
[9] Nikkhah Bahrami, Z., Tehrani, R., Stock ranking of Tehran Stock Exchange companies based on the combined model of decision tree and logistic regression, Banking Monetary Research Quarterly, 2020; 13(45): 435-460. (In Persian)
[10] Karimi pouya, M. R., Ghanbari, M., Jamshidinavid, B., Esmaeilpour, Mansoor, Checking the accura-cy of learning machines in predicting stock returns using the Rough set model, Nearest neighbor and deci-sion tree, Financial Engineering and Portfolio Management, 2019; 10(38): 215-234. doi: 20.1001.1.22519165.1398.10.38.10.6. (In Persian).
[11] Zalaghi, H., Firouzabadtapeh, F., The Study of Impact Accounting Estimates on Prediction of Finan-cial Performance and Liquidity of firms listed in Tehran Stock Exchange, Journal of New Researches in Accounting and Auditing, 2018; 1(4): 155-175. (In Persian).
[12] Ashraf Talesh, S. H., Farsad Amanollahi, G., Keyghobadi, A. R., Lashgari, Z. The Impact of Environ-mental Performance and Social Responsibility on Market Value: The Mediating Role of Company Life, Financial Accounting Knowledge, 2021; 8(3): 229-267. doi: 10.30479/jfak.2021.14722.2806. (In Persian).
[13] Sarraf, F., Barzegar, G. A., Mohammadi, M., Firms’ Earnings Smoothing, Corporate Social Responsi-bility, and Value, Accounting and Auditing Research, 2018:10(39): 189-210. (In Persian).
[14] Hasasyegane, Y., Sohrabi, H. A., Ghavasi Kanari, M., The relationship between social responsibility reporting and corporate value, Financial accounting and auditing researches, 2019; 12(45): 1-20. (In Persian).
[15] Khajavi, Sh., Etemadi, M., Corporate Social Responsibility and Its Reporting, Journal of Health Ac-counting, 2015; 4(2): 104-123. doi: 10.30476/jha.2015.17119. (In Persian).
[16] Rao, K. K., Tilt, C, Gender and CSR decisions: perspectives from Australian boards. Meditari Ac-countancy Research, 2021; 29(1): 60-85. doi: 10.1108/MEDAR-11-2019-0609.
[17] Rai, R., Falahpour, S., Support Vector Machines Application in Financial Distress Prediction of Com-panies Using Financial Ratios, Accounting and Auditing Review, 2009; 15(53): 17.34. (In Persian).
[18] Khakzad Kahag, S., Mokhtari, B., Investigating the relationship between social responsibility, finan-cial crisis and bankruptcy probability with emphasis on companies' quality of earnings in Tehran Stock Exchange, Journal of Accounting and Management, 2019; 2(15): 101-118. (In Persian).
[19] Amirhosseini, Z., Ghobadi, M., Social Responsibility, Financial Performance and Institutional Owner-ship Reporting, Management Accounting, 2016; 9(28): 55-66. Available from: https://sid.ir/paper/198838/en, (In Persian).
[20] Zabihi, A., Daryabari, A., Relationship between different dimensions of corporate social responsibil-ity based on the model Nirwanto and stock price crash risk in Tehran Stock Exchange, Journal of Man-agement Accounting and Auditing Knowledge, 2017; 6(21): 61-76. (In Persian)
[21] Shiri, S., Ghasemi, M., Ghasemi, M., The effect of social responsibility reporting on the company's credit rating, specialized scientific quarterly of modern research approaches in management and ac-counting, 2021; 5(74): 53-139. (In Persian).
[22] Firouzkohi, A. R., Zarei, H., A review of the reasons and theoretical foundations of corporate social, environmental and sustainability reporting, the 17th National Accounting Conference of Iran, Qom, 2018. (In Persian).
[23] Rezaee, N., Amirhosseini, Z., Evaluation of Financial Performance Using Decision Tree Algorithm Method, Financial Management Strategy, 2017; 5(2): 185-205. doi: 10.22051/jfm.2017.9855.1090. (In Persian).
[24] Tahmasebi, S., Eivani, F., Ardeshiri, M. J., An investigation of the interaction relationship between Corporate Reputation and Financial Performance by the simultaneous equation method (3SLS), Manage-ment Research in Iran, 2021; 22(1): 119-141. doi: 20.1001.1.2322200.1397.22.1.6.5. (In Persian).
[25] Garmsiri, S., Vakilifard, H. R., Talebnia, Q., Examine the influence of corporate social responsibility reporting quality and corporate governance characteristics and financial performance on corporate social reputation of Tehran Stock Exchange listed firms, Management Accounting, 2017; 10(35): 31-43. (In Per-sian).
[26] Ahmadimanesh, M., Kharidar, F., Naji Azimi, Z., Implementing Fuzzy Linear Regression Model Using Optimized H Value to Identify Functional Relationships in Qfd, Modern Research in Decision Making, 2018; 3(3): 1-26, (In Persian).
[27] Arab, S., Khashei-Siuki, A., Pourreza-Bilondi, M., Hashemi, S. R., Comparison of Two Nonparametric Models, K- nearest neighbor and M5 Decision Tree in Forecasting the River Discharge in the Karaj Catchment, Watershed Management Research Journal, 2017; 30(4): 47-58. doi: 10.22092/wmej.2018.117085, (In Persian).
[28] Asadi, M., Fathzadeh, A., Taghizadeh Mehrjerdi, R., the Effects of the Daily, Monthly, and Annual Time Scales on the Suspended Sediment Load Prediction, Hydrogeomorphology, 2017; 4(10): 121-143. doi: 20.1001.1.23833254.1396.4.10.7.6, (In Persian).
[29] Ebrahimi Katul, Z., Presenting a method to improve the accuracy of predicting the type of crime of criminals using decision tree algorithm. Master's thesis, Target Higher Education Institute, 2017. (In Per-sian).
[30] Salehi, M., Farrokhi Pilehroud, L., Prediction of profit management using neural network and decision tree, Financial accounting and auditing researches, 2017; 10(37): 1-24. (In Persian).
[31] Sharif far, A., Khalili Araghi, M., Raeesi Vanani, I., Fallah, M., The Assessment of the optimal Deep Learning Algorithm on Stock Price Prediction (Long Short-Term Memory Approach), Financial Engineer-ing and Portfolio Management, 2021; 12(48): 348-370. (In Persian).
[32] Adalat, M. H., Azmi, R., Bagherinejad, Jafar, An Enhanced LSTM Method to Improve the Accuracy of the Business Process Prediction, Journal of Industrial Management Perspective, 2020; 10(3): 71-97. doi: 10.52547/jimp.10.3.71, (In Persian).
[33] Hajizadeh Tahan, M., Ghasemzadeh, Mo., Rezaeian, M., An evolutionary attention-based deep long short-term memory for time series prediction, Computational Intelligence in Electrical Engineering, 2020;11(4): 15-28. doi: 10.22108/isee.2020.121597.1334. (In Persian).
[34] Saleh, M., Zulkifli, N., Muhamad, R., Corporate social responsibility disclosure and its relation on institutional ownership: Evidence from public listed companies in Malaysia 2008-2010, Managerial Au-diting Journal, 2011. doi: 10.1108/02686901011054881.
[35] Saleh, M., Zulkifli, N., Corporate social responsibility disclosure and its relation on institutional ownership: Evidence from public listed companies in Malaysia, Managerial Auditing Journal, 2011; 25: 591 – 613. doi: 10.1108/02686901011054881.