Effect of the Quality of Accruals on the Investment Efficiency of the listed Companies in Tehran Stock Exchange
DOI:
https://doi.org/10.24200/jmas.vol4iss04pp8-15Abstract
In general, in line with the strategic planning for their companies, managers should finance and run projects with positive net present value; however, information asymmetry along with market fluctuations due to the existence of confidential information between the owners and managers of the companies as well as the representation problems arising from the separation of ownership and management may cause the diversion of corporate investment to accept projects with positive net present value or reject projects with negative net present value. The problems are the result of managers' overinvestment or underinvestment because of personal gain. Therefore, accruals quality can be proposed to reduce the problems caused by information asymmetry and representation costs. Methodology: In this regard, in this study, multivariate regression analysis in the form of panel data was used to examine the effect of accruals quality on the investment efficiency of the listed companies in Tehran Stock Exchange during 2010-2014. Results: The results of the assumptions suggest that there is a significant inverse relationship between accruals quality and over/under-investment for the companies listed in Tehran Stock Exchange. Conclusion: Finally, The results of this study show that it is not only those companies with a higher level of accruals quality enjoying more efficient investments; however, higher quality of accruals also leads to more efficient investment.References
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