Purpose The purpose of this paper is to evaluate the qualitative effect of corporate governance components, in the form of managerial entrenchment index, on earnings management and innovation. Design/methodology/approach In this study, the variable of managerial entrenchment, which includes the variables of management independence, dual role of management, management tenure, the board compensation and the board ownership percentage, was initially estimated through the exploratory factor analysis and its effect was evaluated on the dependent variables of the study using the test of multivariable regressions. Hence, a total of 103 listed companies on the Tehran Stock Exchange were selected and analyzed during 2011–2016. In this paper, the Jones model is used as the variable of accrued earnings management and for calculating the real earnings management, the models of abnormal operational cash flows, abnormal production costs and abnormal optional costs are employed. Moreover, the research and development cost to total costs ratio is used for calculating the innovation. Findings The results indicate a negative and significant relationship between managerial entrenchment and accrual-based earnings management; moreover, the entrenched managers are less likely to engage in manipulating the real activities accruals in Iran context. Furthermore, the findings show that there is a positive and significant relationship between managerial entrenchment and firm innovation. Originality/value What really sets this paper apart from other studies is that this research will make aware investors and stakeholders of this fact that managerial entrenchment will be a good way to diminish the manipulation of financial reporting and improve the corporate situation in emerging markets, particularly those bazaars facing with economic sanctions such as Iran. Undeniably, the study results will complete the knowledge gap between the developed economies and the emerging markets.

PurposeThe present study aims to assess the effect of managerial entrenchment on firms’ corporate social responsibility (CSR) activities and financial performance in Iran.Design/methodology/approachIn this paper, the variable of managerial entrenchment, which includes board independence, management duality, management tenure, the board compensation, independence and ownership percentage, is initially analyzed using the exploratory factor analysis method, and its effect on performance and CSR is evaluated using the multivariable regression test. Given that a total of 103 listed companies on the Tehran Stock Exchange are selected during 2012–2017. In this paper, return on assets (ROA) and Tobin’s Q are the two variables to measure financial performance.FindingsThe results of hypotheses testing indicate that there is a positive and significant relationship between managerial entrenchment and financial performance based on the ROA and Tobin’s Q indices, separately. Moreover, the results of this study indicate that there is also a positive and significant relationship between managerial entrenchment and CSR activities.Originality/valueThe current study almost is the first study, conducted in a developing country similar to Iran, and the provided results might be beneficial to other developing countries.

The present study aims to evaluate the contributing factors to agency costs in Iran. In this regard, 112 companies were studied over 2010 - 2016. Since the model is dynamic and the dependent variable suffers from a lag, the generalized method of moments is employed to free the independent variables and the disruptive component. The findings indicate a significant lag in the dependent variable of all three models. An audit committee’s presence significantly affects the decline of agency costs in all three models. Moreover, results suggest that family companies and the state shareholders of all three models have no significant impact on the agency costs. The existence of financial leverage matching with all three models causes the decline of agency costs. In terms of assets, Larger companies based on the three models have more agency costs as well.

Purpose The expectation gap between auditors and users has recently been the topic of many controversies. This paper aims to evaluate the relationship between auditor’s characteristics and audit expectation gap among information users in listed companies on the Tehran stock exchange market. In other words, the study attempts to find whether there is a significant relationship between audit components and the audit expectation gap or not. Design/methodology/approach The multiple regression model is used to test the hypotheses. Research hypotheses are tested using a sample of 78 listed companies on the Tehran stock exchange during 2012-2016, by using integrated data technique of the multiple regression model. Findings The findings show that standard audit fees are not significantly associated with the audit expectation gap. Furthermore, audit fees are negatively associated with the audit expectation gap, which provides that allocated audit price in financial statements gives useful information for external and internal individuals. Predictably, it is recommended that audit opinion significantly determines the level of the audit expectation gap. The authors also find that the independence of the director boards and audit committee members fulfill the expectation gap of individual users. Moreover, finding the negative impact of audit firms ranking on the expectation gap, supports the idea of higher ranked audit firms provide high quality services, and consequently, more reliable information. Finally, the results show that the audit record is positively associated with the audit expectation gap. Originality/value As all recent studies on the expectation gap were qualitative, the present study is the first paper, which measures the expectation gap quantitatively through the statistical method.

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Purpose This paper aims to examine the interrelationships of monetary policy's structural shocks, the real exchange rate and stock prices. Design/methodology/approach According to quarterly data, variables such as gross domestic product, consumer price index, the real exchange rate, stock price and monetary policy indices in the structural vector autoregressions model are estimated. These variables' volatility is attributed to other variables’ structural shocks separately, and analysis of variance tables for all variables is presented. Findings The results show that structural shock on the exchange rate does not affect the stock price, but the monetary policy's structural shock positively impacts the real exchange rate. Moreover, the real exchange rate and monetary policy's structural shocks have a negative impact on the stock price index. However, no significant effect is found pertain to the real exchange rate structural shock, statistically. Originality/value To the best of the authors’ knowledge, the current study model is relatively novel in developing countries, and the study sought strength to develop knowledge on the subject of the study.

The present study aims to realize and become more familiar with the impact and the functions of audit committee and its characteristics, including the expertise and independence of members, related experiences, and change of auditor on the quality of financial reporting in companies listed on the Tehran Stock Exchange (TSE). The required data are gathered from 105 listed companies on the TSE during 2012-2016 and logistic regression model is used for the hypothesis testing. The findings of the study indicate a positive and significant impact of audit committee characteristics, except audit independency which represents a negative association, and changes of auditor on financial restatement. The innovation of the present study relative to other conducted studies lies in the simultaneous evaluation of audit committee characteristics and change of auditor on the quality of financial reporting. Such results could be appropriate for Stocks and Securities practitioners to comply with the chart of the audit committee, to necessitate the use of corporate governance principles, and to voluntarily provide a corporate governance report.

Purpose The current study aims to investigate the relationship between relative performance and change manager in Iran. Design/methodology/approach For this study, the reasons for CEO change and the contributing factors to performance were defined based on the industry type. A systematic elimination approach is applied to select the study sample among listed companies on the Tehran Stock Exchange during 2012–2016. Finally, a 390 firm-year population was tested using multiple regression. Findings The results of hypothesis testing indicate that the possibility of managerial change is less likely after a positive return of the market performance. Moreover, hypothesis testing results reveal that peer firms and specific-firm performance do not contribute to managerial change. The findings also demonstrate that systematic risk has a negative impact on managerial change, whereas unsystematic risks do not significantly play a part in managerial change. Originality/value As the present study is the pioneer study on the impact of managerial change factors on Iranian firms' relative performance, the findings of this study can contribute to the realm of this study and the related literature.