Investigating the Relationship between Accounting Earning and Gross Domestic Product in Companies Listed in Tehran Stock Exchange

Subject Areas : Financial Accounting

Emad  Ghajar ¹ (Department of Accounting and Management, Golestan Science and Research Branch, Islamic Azad University, Gorgan, Iran.)
Parviz  Saeidi ² (Department of Accounting, Aliabad Katoul Branch, Islamic Azad University, Aliabad Katoul, Iran.)

Received: 2016-08-09 Accepted : 2016-09-20 Published : 2016-10-01

Keywords: Gross domestic product, , forecast errors of GPD growth,

Abstract :

Accounting earning represents the positive performance of companies during theirpertinent financial periods, thus it is assumed that accounting earning will benoted by investors, which could contribute to the optimum allocation of resourcesto successful companies. It can also play a major role in the economic growth anddevelopment of a society. This research focuses in the relationship between accountingearning and gross domestic product (GPD). The research populationincludes all companies listed in Tehran Stock Exchange. Due to the limitations ofsample size, 65 companies between 2009 and 2013 were studied. The findingsshowed that there is a significant relationship between accounting earning andGPD growth rate. A similar relationship was also observed between accountingearning and forecast errors of GPD growth. The control variables including inflationand employment rate had a significant relationship with GPD growth rate andforecast errors of GPD growth.

References:

[1] Roudposhti, Fereidoun., and Amir Hosseini, Zahra. "The use of economic leverage in order
to assess the impact of macroeconomic variables on corporate performance", Financial
Knowledge Analysis of Securities,2011, 7: 123-137.

[2] ZarezadehMehrizi, Mohammad Sadegh. "The relationship between performance evaluation crite
ria and annual output of the company's shares listed in Tehran Stock Exchange "Shahid Chamran
University, Faculty of Economics and Social Sciences, Master's Thesis, 2009.

[3] Hosseini, Seyyed Mohammad, and Karimi, Farhad. Investigating the relationship between several
macroeconomic variables (inflation rate, GDP changes, changes in the quantity of money and
changes in interest rates) and stock returns of companies listed in the stock exchange ", the first
national conference to examine ways of enhancement of management, Accounting and Engineer
ing Industry in Organizations, 2011.

[4] Karimzadeh, Mostafa. The relationship of long-term stock price index with macroeconomic varia
bles in Iranian economy using co-integration method, Iranian Economic Research Quarterly,
2007, 26.

[5] Panos N. P and Yaniv K.," Accounting earnings and gross domestic product", Journal of Account
ing and Economics, 2014, 57, 76–88

[6] Beaver W.H. " Financial Accounting: An Accounting Revolution". Englewood Cliffs, NJ. Pren
tice-Hall, 1988.

[7] Cheung YW and Ng.,” International Evidence on the Stock Market and Aggregate Economic Ac
tivity”, Journal of Empirical Finance, 1998, 5, p. 281-296.

[8] Dechow, P. M. and Dichev, I. D. “The Quality of Accruals and Earning”, Working Paper, Univer
sity of Michigan Business School, 2002.

[9] Ferdousi,N, , Chakma.T and Raseduzzaman.M, ” An Empirical Analysis between Banking Sector
Development and Growth Rate of GDP in Bangladesh”, International Journal of Financial
Economics, 2013, 2, (3), 94-113

[10] Kotari, S.P."Performance matched discretionary accrual measures". Journal of Accounting and
Economics, 2001, 39, 163-197.

[11] Lili and Zvlivf.Hv. Responses of the Stock Market to Macroeconomic Announcements across
Economic States IMF Working Paper, 1998, p. 93-97.

[12] Maysami, R.C. and T.S. Koh A.,” Vector Error Correction Model of the Singapore Stock Mar
ket”, International Review of Economics and Finance, 2000, 9, p. 79-96.