The study of effects of accounting conservatism on the flexibility of the financial decisions

Journal Title: International Research Journal of Applied and Basic Sciences - Year 2013, Vol 4, Issue 1

Abstract

Today, by increasingly rapid changes in the internal and external factors affecting organizations, the increased flexibility of them toward such changes is imperative. In today's competitive world, flexibility is a key factor for the survival of organization and a tool to dominate competitors. Therefore, this study attempts to examine the relation between accounting conservatism and flexibility in financial decisions, such as liquidity, decisions on stock or debt issuance and the sensitivity of investment cash flows. Therefore some hypotheses were tested during the period 2001 to 2010. The statistical sample consisted of 100 companies operating in different parts of Tehran Stock Exchange which are selected considering five limitations and by a screening method. The test procedure which was analyzed using Eviews software is correlation analysis, and the relationship between dependent and independent variable is estimated using panel data. The results indicate that at time interval of the study and at confidence interval of 95% in the manufacturing companies at Tehran Stock Exchange Market, conservative accounting has a direct and significant relationship with liquidity management, and a significant and inverse relationship with the sensitivity of investment cash flows. In addition, there is not any significant relationship between conservative accounting, decisions on the distribution of cash dividends and decision to issue shares and using debt.

Authors and Affiliations

Koroush Ghavi| Department of Accounting, the Sciences and Research Branch, Islamic Azad University, Tehran, Iran,Ghavi_Ghavi@yahoo.com, Yousef Najafi| Department of Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran, Aziz Arfai| Department of Management, Kermanshah Branch, Islamic Azad University, Kermanshah, Iran

Keywords

Related Articles

“The Activity based costing and target costing as modern techniques in determination of product cost”

Today, in the interrelated market place those enterprises are able to compete that manage to pin hope in continuance of their own commercial activity. More simply, they should manufacture some products with competitive a...

Effect of foliar application of Micro-nutrients on yield and yield components of safflower under conventional and ecological cropping systems

Information regarding the effect of foliar application of zinc and manganese on the yield and yield components of safflower (Carthamus tinctorius L. cv. Isfahan landrace) under conventional and ecological cropping system...

The Effect of Using Email on Enhancing Iranian Intermediate EFL Learners Writing Proficiency

Iran is a progressing and developing country and the need for the help of technology in language learning and teaching programs is very essential. The present study was set out to investigate the effects of E-mail on imp...

Spiritual competencies of managers: The study of forgiveness at organization in the light of Islamic teachings

One of subjects that is discussed in management field in early years, is positive organizational behavior. Positive organizational behavior tries to prepare organization atmosphere to achieve higher efficiency and functi...

Examining the effect of Brand dimension (trademark) on home appliances consumers' behavior Case study: LG brand in Rasht city

One of the most important and valuable assets of a company is its trademark. The more valuable is a trademark for consumers more profits the company achieves. The present paper aims to identify the effect of brand dimens...

Download PDF file
  • EP ID EP5284
  • DOI -
  • Views 346
  • Downloads 14

How To Cite

Koroush Ghavi, Yousef Najafi, Aziz Arfai (2013). The study of effects of accounting conservatism on the flexibility of the financial decisions. International Research Journal of Applied and Basic Sciences, 4(1), 131-138. https://europub.co.uk/articles/-A-5284