STUDYING THE ROLE OF ACCOUNTING CONSERVATISM AND INSTITUTIONAL INVESTORS ON INVESTMENT PROCESS OF FIRMS ACCEPTED IN TEHRAN STOCK EXCHANGE MARKET

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1 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle STUDYING THE ROLE OF ACCOUNTING CONSERVATISM AND INSTITUTIONAL INVESTORS ON INVESTMENT PROCESS OF FIRMS ACCEPTED IN TEHRAN STOCK EXCHANGE MARKET Azam Mansoori 1 and * Ali Kiamehr 2 1 Deparmen of Accouning, Loresan Science and Research Branch, Islamic Azad Universiy, KhoramAbad, Iran 2 Deparman of Accouning, Khorramabad Branch, Islamic Azad Universiy, Khorramabad, Iran *Auhor for Correspondence ABSTRACT Due o informaion role of conservaism, i seems ha conservaism causes enhancemen in monioring managemen invesmen decisions hrough decreasing invesmen where managers rend o excessive invesmen and i also causes o faciliae accessibiliy o free exernal financial providence via increasing invesmen where managers inend o have invesmen less han usual. Tha s why, conservaism has an imporan informaion role which can decrease less and excessive invesmen. Therefore, his sudy aims o show his issue ha conservaism and insiuional ownership boh have informaion benefis which are followed by achieving a desirable invesmen. Saisical populaion in his sudy is all of firms acceped in Tehran sock exchange marke. Samples were chosen in a way ha hey were acceped in sock exchange from To analyze daa in his research a he firs sep, daa were analyzed in descripive mehod. To es hypoheses, Cross-secional regression under parial leas squares mehod has been used. All of ess have been done using Eviews7 saisical sofware resuls obained from his research indicae ha here is a significan relaionship beween conservaism and invesmen, bu here is no a significan relaionship beween insiuional ownership and invesmen. Keywords: Condiional Conservaism, Uncondiional Conservaism, Acive Insiuional Invesors INTRODUCTION Capial marke is popularized as one of he underlying bases of economic growh and developmen in he counries. Invesmen is accouned as he mos imporan deermining componen in economy of each counry. In his regard, informaion plays a fundamenal role in performance of capial marke. Due o his fac ha mos of decision such as invesmen decisions are made in uncerainy, so in his circumsance, informaion has an impressive role o decrease uncerainy. To reduce uncerainy, required informaion has o be provided from differen references. Firms as he economic unis are always inending invesmen, profiabiliy and evenually wealh creaion. Invesmen in relaively deeply involved in informaion asymmery and agency problems. Wha is ofen exised in beliefs is ha informaion asymmery has been added o difference exised in he marke and influence in he cos of exernal finance providence and i will easily lead o adequae invesmen for he firms which are suffering liquidiy consrain. While agency problem is ofen driven from excessive invesmen by managers for personal benefis and abusing Free Cash Flow in projecs wih negaive Ne Presen Value (Jensen and Meckling, 1976). Due o agency problem, i is possible ha firms managers don use firms resources o increase sockholders wealh. For his purpose, o suppor sockholders resources, differen ools are used o resolve his problem. According o he role of accouning in deermining conrac condiion and monioring is correc implemenaion beween owners and managers, accouning principles and procedures are applied which aimed o proec he righs of beneficiaries and fair proposing of financial saemens. Conservaism concep is applied o give an effecive mechanism o conracs beween firm, crediors and sockholders. On he oher hand, insiuional invesors are one of he groups working in he marke which are able o have considerable effec on direcion of markes movemen hrough major deals. Under efficien-monioring hypohesis and because of invesed wealh volume, insiuions are probably Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2850

2 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle managing heir invesmens acively. Based on aiude of insiuional invesors, invesors are exper who have relaive advanage in collecing and processing informaion. Moreover, organizaional coheren srucure and ownership complicaed nework will feaure disincion beween hese groups more and also, insiuional invesors have more incenive o monior managers and are able o conrol excessive invesmen in business unis. Insiuional invesors will increase informaion ransparency by implemening corporae governance and will decrease informaion asymmery and his acion causes o srengh efficiency in capial marke. Accordingly, a quesion is arisen: have firms working in he Tehran sock exchange developed conservaism and insiuional ownership in order o erminae vas inefficien behaviors of firms invesmen such as excessive invesmen and insufficien invesmen? Lieraure Review Xu e al., (2012) have conduced a research eniled Accouning conservaism on firms invesmen process and found ha here is a posiive and significan relaionship beween accouning conservaism and capial coss and he relaionship beween accouning conservaism and capial cos for companies wih privae ownership is weaker. This research has been used as he key paper for our paper. LaFond (2010) found ha accouning conservaism reduces informaion asymmery. They came o conclusion ha informaion asymmery beween people in and ou of company will lead o conservaism reques in providing financial saemen. Ma Tao (2010) invesigaed impacs of accouning conservaism on invesmen incenives by managers. Resuls indicae he negaive relaionship beween conservaism and firms invesmen and fuure operaional performance for companies which had encounered financial consrains. Bohl e al., (2009) in heir paper poined ha appearing insiuional invesors in capial marke will advance i oward efficiency. So ha insiuional invesors by reliance on heir influence in he marke, can monior presening accurae informaion by companies and respecing professional ehic and increase accuracy and correcness of informaion. Bushee e al., (2008) have analyzed his issue ha insiuional invesors prefer o form heir porfolio in he companies wih he beer governance mechanism. This research showed ha however insiuional invesors have incenives o inves in he companies wih he beer governance mechanism, bu here is no relaionship beween insiuional ownership and corporae governance. Lara e al., (2007) have examined he relaionship beween accouning conservaism and invesmen efficiency. Findings indicae ha here is a negaive relaionship beween conservaism and crieria of insufficien and excessive invesmen and here is posiive relaionship beween conservaism and fuure profiabiliy. So, firms which have more conservaism reporing, ake an acion o do more efficien and more profiable invesmen. Ahmed and Duellman (2007) showed ha in one hand, percenage of foreign managers in he board of direcors has he posiive relaionship wih conservaism and in anoher hand; rae of domesic managers has he negaive relaionship wih conservaism. Ahmed and Duellman have used American samples in heir research and aced based on general acceped accouning principles. Of course, unlike Basu model, heir earnings ime asymmery crierion is no based on earnings response in raio wih sock reurn of a period. Bu hey have inroduced an adjused crierion of Basu Model in Was sudy (2005). Therefore, earnings ime asymmery crierion is evaluaed based on earnings response in raio wih sock reurn in several periods and in an accumulaive form. Was (2003) in his researches has announced ha if firms conracs wih differen groups like invesors and crediors are regulaed based on accouning figures, hen due o benefi conflic beween managers and hose groups, managers will ry o manipulae figures for heir benefis. Meanwhile, conservaism as an effecive conracual mechanism can neuralize biased behaviour of managers. Bushee (1998) expresses ha insiuional invesors monior he firm via collecing informaion and pricing managemen decisions implicily and hrough Company managemen pracice explicily. Was e al., (1979) believe ha conservaism aids performing firm s sraegic sysem especially sudying invesmen procedures. In heir viewpoin, conservaism gives imely sympoms o he managers and shareholders o invesigae o Ne Presen Value of curren projecs and ake correcive acions. Research Hypoheses In his paper, 2 primary hypoheses and 4 secondary hypoheses have been considered as he following: Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2851

3 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle The firs primary hypohesis: There is a significan relaionship beween accouning conservaism and invesmen. The firs secondary hypohesis: There is a significan relaionship beween condiional conservaism and invesmen. The second secondary hypohesis: There is a significan relaionship beween uncondiional conservaism and invesmen. The second primary hypohesis: There is a significan relaionship beween insiuional ownership and invesmen. The hird secondary hypohesis: There is a significan relaionship beween ownership of acive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. The fourh secondary hypohesis: There is a significan relaionship beween ownership of inacive insiuional owners (insiuional owners who don have agen in board of direcors) and invesmen. and Measuremen Sraegy In his sudy, mulivariable regression is being used o sudy he relaionship beween accouning conservaism and insiuional invesmen on invesmen process. Model in his research is driven from research ley paper (Xu e al., 2012). To es he firs primary hypohesis, he following model is being used: INV MCONACC NCONACC SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, 5 i, i, To es he firs secondary hypohesis, he following model is being used: INV MCONACC SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, To es he second secondary hypohesis, he following model is being used: INV NCONACC SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, To es he second primary hypohesis, he following model is being used: INV INACINST ACINST SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, 5 i, i, To es he hird secondary hypohesis, he following model is being used: INV INACINST SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, To es he fourh secondary hypohesis, he following model is being used: INV ACINST SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, In which: Condiional conservaism: MCONACC i, Uncondiional conservaism: NCONACC i, Acive insiuional invesors: INACINST i, Inacive insiuional invesors: ACINST i, Firm s size: SIZE i, Financial leverage: Leverage i, SalesGrowh i, Firm s invesmen: INV i, Error :ε Independen Accouning Conservaism Independen variable in his research is accouning conservaism. In his sudy, conservaism has been divided ino condiional conservaism and condiional conservaism which can be evaluaed as he following: Condiional conservaism: Non operaing accruals (1) m ( 1) Toal asse Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2852

4 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle Uncondiional conservaism: Toal accurals (2) n ( 1) Toal asse Accruals and non-operaing accruals can be calculaed by he following relaions: ACC i = NI i + DEP i CFO i (3) OACC = ΔAR i + ΔI a + ΔPE i ΔAP i ΔTP i (4) NoACC i = ACC i oacc (5) In which: ACC: Accumulaed accruals ΔI: Change in Invenory NI: Ne Income before exraordinary iems ΔPE: Changes in Prepaymens DEP: Depreciaion coss Cfo: Operaing cash flow OACC: Operaing accruals ΔAR: Changes in received accouns ΔAP: Changes in paid accouns ΔTP: Changes in paid ax No ACC: Non-operaing Accruals The main purpose o choose hese 2 models for conservaive measuremen is as he following: Curren models for measuring conservaism are encounering various errors. Informaion used in his research is based on accouning informaion in which marke indices haven been used. Due o accessibiliy o he financial saemens, o measure laen conservaism in financial saemen, his model is more appropriae for developing markes such as Iran capial marke (BaniMahd and Baghbani, 2009). Ownership of Insiuional Invesors I is equal o percenage of share kep by grea invesors such as banks, insurance companies, invesor companies ec. (Bushee, 1998). In his sudy, insiuional invesors have been caegorized ino wo caegories: acive and inacive. Inacive insiuional invesors have high cash flow and have momenum rading sraegies. They also don have incenive o conrol manager and have agen in board of direcors of invesee companies. In conras, acive insiuional invesors have long-erm view and consider companies long-erm performance. So, hey are moivaed o have agen in board of direcors of invesee companies. ACINST: Raio of common share belong o he acive insiuional invesors (insiuional invesors who have agen in board of direcors). INACINST: Raio of common share belong o he inacive insiuional invesors (insiuional invesors who don have agen in board of direcors). Dependen Variable: Firm s Invesmen In his research, invesmen has been considered as he cash paid for acquisiion or consrucion of fixed asses; inangible asses or oher noncurren asses divided by oal asses a he beginning of period. COF INV Relaion (6) TA 1 INV: Invesmen COF: Cash paid for acquisiion or consrucion of fixed asses TA -1: Toal asses a he beginning of period. Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2853

5 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle Conrol variables: 1) Firm s size: In he presen sudy, size is equal o he naural logarihm of oal asses a he end of period. 2) Financial leverage: This variable has been defined as he oal deb o he oal asses a he end of period. 3) Sale growh index: This variable has been defined as he oal sale changes o he sale prior o period. MATERIALS AND METHODS Research Mehodology Curren sudy in erms of goal-based-classificaion is applied research.also, in erms of mehodology and naure; i is descripive-correlaion research. In his sudy, he main aim is o deermine he relaionship beween variables. For his purpose, based on scales of variables measuremen, appropriae indices are considered. Daa measuremen scale is he relaive scale. Relaive scale is providing he highes and mos accurae measuremen level. Due o his issue ha his research is aimed o undersand he correlaion beween accouning conservaism and insiuional invesors wih invesmen and correlaion researches include all of researches in which i is rying o discover and deermine he relaionship beween differen variables using correlaion coefficien, so correlaion coefficien is an accurae index which expresses how much variable changes are dependen on oher variable. Research Populaion Saisical populaion refers o he all groups, people, occurrences or suffs which researches wan o search abou hem. To do each research, specifying saisical populaion is one of he necessiies, because researches have o know his job area in advance o be able o collec informaion and daa required for invesigaion and analysis. Saisical populaion in his sudy is all of companies acceped in Tehran sock exchange. Mehod of Daa Collecion and Analysis In daa collecion, research heoreical opics have been accumulaed hrough sudying references, journals, domesic and foreign references exised in he books and also using inerne. Informaion collecion has been done using companies basic informaion. Tha is, research required informaion and daa has generally been obained using library mehod, NovinRahavard sofware, referring o Tehran sock exchange marke and sudying financial saemens of companies acceped in Tehran sock exchange marke during 2007 o In his case, in addiion o fundamenal financial saemens, informaion relaed o financial saemens has been exraced from sock exchange informaion sie. Afer respecive collecing informaion, Excel sofware has been applied o rank informaion and calculae variables and evenually obained informaion was analyzed using Eviews sofware. Hypoheses Tes According o he resuls obained from daa analysis, resuls of he curren sudy will be as he following: The Firs Primary Hypohesis Based on his hypohesis, i is expeced ha here is a significan relaionship beween accouning conservaism and invesmen. The firs primary hypohesis has been saisically formulaed as he following: H 0 : There is no a significan relaionship beween accouning conservaism and invesmen. H 1 : There is a significan relaionship beween accouning conservaism and invesmen. Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2854

6 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle Table 1: Resuls obained from he firs primary hypohesis INV MCONACC NCONACC SIZE Leverage SalesGrowh T es i, 0 1 i, 2 i, 3 i, 4 i, 5 i, i, Durbin-Wason es T saisics Sandard error / E-05 F saisics F probabiliy Esimaed coefficien E Coefficien of deerminaion Adjused coefficien of deerminaion Resuls obained from esimaion shows ha es probabiliy for coefficiens of variables such as condiional conservaism, uncondiional conservaism, firm s size and financial leverage o invesmen is less han 5%. Therefore, esimaed coefficien of aforemenioned variables is significan and condiional conservaism and firm s size o invesmen have a posiive relaionship and esimaed coefficien of uncondiional conservaism and financial leverage o invesmen have a negaive and reverse relaionship, bu since saisics of variable of sales growh o invesmen is more han 5%, so his relaionship is no saisically significan and wih 95% confidence, he firs hypohesis for his variables is rejeced. Coefficien of deerminaion indicaes he explanaory power of he independen variables which are able o describe 43% of dependen variable changes. F saiss expresses ha he model is saisically significan. In respec wih he hypohesis and due o his fac ha variables of condiional conservaism, uncondiional conservaism, firm s size and financial leverage o invesmen will remain in he model, H 0 hypohesis is rejeced. Tha is, here is a significan relaionship beween accouning conservaism and invesmen. Regression equaion is as he following: INV MCONACC NCONACC SIZE Leverage i, i, i, i, i, The Firs Secondary Hypohesis The firs secondary hypohesis has been saisically formulaed as he following: H 0 : There is no a significan relaionship beween condiional conservaism and invesmen. H 1 : There is a significan relaionship beween condiional conservaism and invesmen. Table 2: Resuls obained from he firs secondary hypohesis INV MCONACC SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, T es T saisics Sandard error Esimaed coefficien E E-06 Durbin-Wason F saisics es F probabiliy Coefficien of deerminaion Adjused coefficien of deerminaion Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2855

7 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle es probabiliy for coefficiens of variables such as condiional conservaism, firm s size and financial leverage o invesmen is less han 5%. Therefore, esimaed coefficien of aforemenioned variables is significan and condiional conservaism and firm s size o invesmen have a posiive relaionship and esimaed coefficien of financial leverage o invesmen have a negaive and reverse relaionship, bu since saisics of variable of sales growh o invesmen is more han 5%, so his relaionship is no saisically significan and wih 95% confidence, he firs hypohesis for his variables is rejeced. Coefficien of deerminaion indicaes he explanaory power of he independen variables which are able o describe 43% of dependen variable changes. F saiss expresses ha he model is saisically significan. In respec wih he hypohesis and due o his fac ha variables of condiional conservaism, firm s size and financial leverage o invesmen will remain in he model, H 0 hypohesis is rejeced. Tha is,here is a significan relaionship beween condiional conservaism and invesmen. Regression equaion is as he following: INV MCONACC SIZE Leverage i, i, i, i, The second secondary hypohesis The second secondary hypohesis has been saisically formulaed as he following: H 0 : There is no a significan relaionship beween uncondiional conservaism and invesmen. H 1 : There is a significan relaionship beween uncondiional conservaism and invesmen. Table 3: Resuls obained from he second secondary hypohesis INV NCONACC SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, T es T saisics Sandard Esimaed error coefficien E E-06 Durbin-Wason es F saisics F probabiliy Coefficien of deerminaion Adjused coefficien of deerminaion Resuls obained from esimaion shows ha es probabiliy for coefficiens of variables such as uncondiional conservaism, firm s size and financial leverage o invesmen is less han 5%. Therefore, esimaed coefficien of aforemenioned variables is significan and firm s size o invesmen has a posiive relaionship and esimaed coefficien of uncondiional conservaism and financial leverage o invesmen have a negaive and reverse relaionship, bu since saisics of variable of sales growh o invesmen is more han 5%, so his relaionship is no saisically significan and wih 95% confidence, he firs hypohesis for his variables is rejeced. Coefficien of deerminaion indicaes he explanaory power of he independen variables which are able o describe 42% of dependen variable changes. F saiss expresses ha he model is saisically significan. In respec wih he hypohesis and due o his fac ha variables of uncondiional conservaism, firm s size and financial leverage o invesmen will remain in he model, H 0 hypohesis is rejeced. Tha is, here is a significan relaionship beween uncondiional conservaism and invesmen. Regression equaion is as he following: INV NCONACC SIZE Leverage i, i, i, i, The Second Primary Hypohesis The second primary hypohesis has been saisically formulaed as he following: H 0 : There is no a significan relaionship beween insiuional ownership and invesmen. H 1 : There is a significan relaionship beween insiuional ownership and invesmen. Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2856

8 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle Table 4: Resuls obained from he second primary hypohesis INV INACINST ACINST SIZE Leverage SalesGrowh T es i, 0 1 i, 2 i, 3 i, 4 i, 5 i, i, Durbin-Wason es T saisics Sandard error E-05 F saisics F probabiliy Esimaed coefficien E Coefficien of deerminaion Adjused coefficien of deerminaion es probabiliy for coefficiens of variables such as firm s size and financial leverage o invesmen is less han 5%. Therefore, esimaed coefficien of aforemenioned variables is significan and firm s size o invesmen has a posiive relaionship and esimaed coefficien of financial leverage o invesmen has a negaive and reverse relaionship, bu since saisics of variables of sales growh o invesmen and acive insiuional ownership is more han 5%, so his relaionship is no saisically significan and wih 95% confidence, he firs hypohesis for his variables is rejeced. Coefficien of deerminaion indicaes he explanaory power of he independen variables which are able o describe 42% of dependen variable changes. F saiss expresses ha he model is saisically significan. In respec wih he hypohesis and despie his fac ha variables of firm s size and financial leverage o invesmen will remain in he model, H 0 hypohesis is acceped. Tha is, here is no a significan relaionship beween insiuional ownership and invesmen. Regression equaion is as he following: INV SIZE Leverage i, i, i, The Third Secondary Hypohesis The hird secondary hypohesis has been saisically formulaed as he following: H 0 : There is no a significan relaionship beween ownership of acive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. H 1 : There is a significan relaionship beween ownership of acive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. Table 5: Resuls obained from he hird secondary hypohesis INV INACINST SIZE Leverage SalesGrowh i, 0 1 i, 2 i, 3 i, 4 i, i, T es T saisics Sandard Esimaed error coefficien E E-06 Durbin-Wason F saisics es F probabiliy Coefficien of deerminaion Adjused coefficien of deerminaion Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2857

9 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle Resuls obained from esimaion shows ha es probabiliy for coefficiens of variables such as firm s size and financial leverage o invesmen is less han 5%. Therefore, esimaed coefficien of aforemenioned variables is significan and firm s size o invesmen has a posiive relaionship and esimaed coefficien of financial leverage o invesmen has a negaive and reverse relaionship, bu since saisics of variables of acive insiuional ownership and sales growh o invesmen are more han 5%, so his relaionship is no saisically significan and wih 95% confidence, he firs hypohesis for his variables is rejeced. Coefficien of deerminaion indicaes he explanaory power of he independen variables which are able o describe 42% of dependen variable changes. F saiss expresses ha he model is saisically significan. In respec wih he hypohesis and despie his fac ha variables of firm s size and financial leverage o invesmen will remain in he model, H 0 hypohesis is acceped. Tha is, here is no a significan relaionship beween ownership of acive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. Regression equaion is as he following: INV SIZE Leverage i, i, i, The Fourh Secondary Hypohesis The fourh secondary hypohesis has been saisically formulaed as he following: H 0 : There is no a significan relaionship beween ownership of inacive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. H 1 : There is a significan relaionship beween ownership of inacive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. Table 6: Resuls obained from he fourh secondary hypohesis INV ACINST SIZE Leverage SalesGrowh T es i, 0 1 i, 2 i, 3 i, 4 i, i, Durbin-Wason es T saisics Sandard error E E-05 F saisics F probabiliy Esimaed coefficien E E Coefficien of deerminaion Adjused coefficien of deerminaion Resuls obained from esimaion shows ha es probabiliy for coefficiens of variables such as firm s size and financial leverage o invesmen is less han 5%. Therefore, esimaed coefficien of aforemenioned variables is significan and firm s size o invesmen has a posiive relaionship and esimaed coefficien of financial leverage o invesmen has a negaive and reverse relaionship, bu since saisics of variables of inacive insiuional ownership and sales growh o invesmen are more han 5%, so his relaionship is no saisically significan and wih 95% confidence, he firs hypohesis for his variables is rejeced. Coefficien of deerminaion indicaes he explanaory power of he independen variables which are able o describe 42% of dependen variable changes. F saiss expresses ha he model is saisically significan. In respec wih he hypohesis and despie his fac ha variables of firm s size and financial leverage o invesmen will remain in he model, H 0 hypohesis is acceped. Tha is, here is no a significan relaionship beween ownership of inacive insiuional owners (insiuional owners who have agen in board of direcors) and invesmen. Regression equaion is as he following: Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2858

10 Indian Journal of Fundamenal and Applied Life Sciences ISSN: (Online) An Open Access, Online Inernaional Journal Available a Research Aricle INV SIZE Leverage i, i, i, Conclusion Based on research hypoheses, i had been anicipaed ha here is a significan relaionship beween conservaism and invesmen. Accordingly, wih respec o 2 famous crieria of conservaism measuremen, 2 hypoheses were formularized in his conex. Due o significan relaionship beween condiional and uncondiional conservaism wih invesmen, i seems ha by idenifying conservaive opimal level, i can be also hopeful o increase invesmen. Hence, invesors can predic invesmen rae using idenificaion of firm s conservaism level. Wih he aid of his relaion, hey can gain heir respecive profi and evenually hey can iner sock exchange marke by he vaser view. This issue will lead o Iranian capial marke boom. Furhermore, despie his maer ha curren resources indicae ha insiuional ownership has changes o one of he mos prevalen expressions in he world rade vocabularies a he beginning of he new millennium, having corporaive governance mechanisms guaranees benefi of shareholders, buyers, debors and oher beneficiaries in decision makings and decisions made by adminisraive commiees, bu in general summary and conclusion of he relaionship beween insiuional ownership and invesmen, i can be ariculaed ha here is no significan relaionship beween insiuional ownership and invesmen in he in he area of his sudy. REFERENCES Ahmed A and Duellman S (2007). Accouning Conservaism and Board of Direcor Characerisics: An Empirical Analysis. Journal of Accouning and Economics. Bohl M, Brzezcynski J and Wilfling B (2009). Insiuional invesors and sock reurns Volailiy: Emperical evidence from a naural experimen, Journal of Banking & Finance Bushee BJ, Carer ME and Gerakos J (2008). Insiuional Invesor Preferences for Corporae Governance Mechanism, Working papered, Universiy of Pennsylvania, Bushee B (1998). Insiuional invesors. Long erm invesmen and earnings managemen, Accouning Review Jensen M and Meckling W (1976). Theory of he firm: Managerial behaviour, agency coss and ownership srucure, Journal of Financial Economics LaFond Was R (2010). The informaion role of conservaism. The Accouning Review 83(2) Lara J, Manuel G, Beariz Garcia O and Penalva F (2007). Cos of Equiy and Accouning Conservaism, IESE Business School, Universiy of Navarra. Was RL and Zimmerman JL (1979). The demand for and supply of accouning heories he marke for excuses, The Accouning Review 54(2) Was RL (2003). Conservaism in accouning Par II: evidence and research opporuniies, Accouning Horizons Xu X, Wang X and Han N (2012). Accouning conservaism, ulimae ownership andinvesmen efficiency, China Finance Review Inernaional 2(1) Copyrigh 2014 Cenre for Info Bio Technology (CIBTech) 2859

Management Science Letters

Management Science Letters Managemen Science Leers 3 (2013) 97 106 Conens liss available a GrowingScience Managemen Science Leers homepage: www.growingscience.com/msl Comparing he role of accruals and operaing cash flows on users'