The Relation between the Firm's Characteristics and the Quality of Profit Accrual Items

Transcription

1 J. Basic. Appl. Sci. Res., 3(1)646-64, 13 13, TexRoad Publicaion ISSN Journal of Basic and Applied Scienific Research The Relaion beween he Firm's Characerisics and he Qualiy of Profi Accrual Iems Mehdi Habibi 1, Shaer Biyabani, Mehdi Meshki, Moreza Malekpour 1 Masers in business Managemen, Islamic Azad Universiy, Rash Branch, Deparmen of Managemen & business, Islamic Azad Universiy, Rash Branch, Iran ABSTRACT In his aricle he exised relaion beween firm's characerisics and he accrual iems' qualiy and he profi has been examined; he saisic populaion of he research includes 88 acceped firms in Tehran sock exchange during he years 6-1. To selec he sample, he omissive mehod has been chosen so ha hose firms wih he expeced characerisics would be used. To examine he variables of presen research he Dechow-Dichev approach (DD) has been used. The sandard measure of he accrual iems' qualiy in his research is he remained iems of he working capial change regression on he cash flows operaions in he pas period, presen period and fuure period; as he high posiion of remained iems' sandard deviaion indicaes low qualiy of he accrual iems. This research's resuls indicae ha firm's characerisics (such as firm's operaion cycle, firm's size, sale swing, he number of ime losses are repored during differen periods and accrual iems' size) can be used as a ool for evaluaing he qualiy of accrual iems and profi. According o he obained resuls from his research, he qualiy of accrual iems has a significan relaion wih he operaional period, firm's size, he number of ime losses are repored and he accrual iems' size while i has ni any significan relaion wih sale swing. KEYWORDS: he qualiy of accrual iems, esimaion error, firm's characerisics. INTRODUCTION One of he main reasons for providing financial liss is o represen useful and beneficial informaion for a majoriy of consumers inside and ouside he organizaion and for making wise economical decisions. One of he iems in financial liss is he NET profi and i is expeced ha he NET profi indicaes he resul of an economical uni's urnover over a financial period. Due o he imporance of a firm's NET profi for he consumers of financial liss he managemen ries o improve he represenaion of he amoun and firm's profi. One of he ways for improving he represenaion of firm's profi is using he accrual iems. According o he accouning exs, he accrual iems predicion error is one of he hings which may cause profi deviaion from he acual performance oucomes of he economic uni. Therefore i seems ha i would be necessary performing a research for examining he exised relaion beween he anicipaing errors of he accrual iems (he sandard of he accrual iems' qualiy) wih he firm's characerisics which affec on he accrual iems' qualiy sysemaically and wihou managemen's inerfering and manipulaing. The main produc of accouning sysem as an informaion sysem and a subse of managemen informaion sysem is he financial repors ha heir main aim is providing he necessary informaion for performance appraisal and profiabiliy of he economical insiue. One of he accouning iems which is provided and represened in financial repors is he NET profi which has differen usages. Profi, usually, is considered as a base for ax evaluaion, a facor for codifying he dividend policies and a guide for invesmen and making righ decisions and finally a facor for anicipaing. NET profi calculaion of he economical insiue is due o accouning mehods and esimaions so according o i he manipulaing of he profi can be done by he managemen. The exisence of appropriae ground for making changes in he repored profi is due o he exisence of ineress' conflic and some innae limiaions of accouning such as: The exied inadequacies in accouning esimaions process; The possibiliy of using several accouning mehods; Beside he aforesaid facors which affec he accouning repored profi i also should be noiced ha in profi measuring process he accrual sysem is used which affecs he accouning profi's reporing and measuremen process; as he accrual iems moderae he recogniion of he cash flow during he period so ha he moderaed numbers would measure he economical uni's urnover beer (Dasgir and Rasgar, 1). For insance, regisering *Corresponding Auhor: Mehdi Habibi, Masers in business Managemen, Islamic Azad Universiy, Rash Branch, Mehdi_1498@yahoo.com Tel:

2 Habibi e al., 13 of a receivable accoun would speed he recogniion of he fuure cash flow and makes he recogniion of accouning profi and sale resulan economic revenues concurren. According o Barh and e al () using esimaions in financial liss affecs profi and i could cause a differen profi wih real urnover resul of rading uni. The said accrual iems are based on esimaions ha if are wrong hey should be correc in nex periods in he fuure accrual iems and fuure profis. The esimaion error and is consequence correcing will reduce he accrual iems' benefi (Noravesh and Mashayekhi, 9). The aforesaid reasons have caused he real economical insiue's profi o be differen from he repored profi in he financial liss. Therefore he consumers who use he financial informaion should noice he qualiy of profi besides is quaniy in heir appraisals. The aim of his research is o examine he exised relaion beween some feaures of differen firms wih he accrual iems' qualiy so ha we could deermine ha which feaure of a firm has significan relaion wih he accrual iems and profi's qualiy. 1- Maerials and mehods -1- The role of accrual iems and heir imporance The accrual iems explain he differences beween he accouning profi and he operaion's resuled cash flow; as he huge posiive accrual iems show he excess of he repored profi in proporion o he produced cash flows by he firm and his difference in resul is due o using he accrual accouning sysem. The accrual iems can be divided ino wo pars: - Opional componens ha are hose accrual iems on which he managemen can apply some conrols. - The non-opional componens ha are hose accrual iems on which he managemen canno apply conrols. One of he main roles of accrual iems is ransferring or moderaing he recogniion of cash flows during he ime; as he moderaed numbers of he cash flows (profi) can appraise he firm's urnover beer. For insance, regisering a receivable accoun can cause early recogniion of he fuure cash flows in profi and early conformiy of happenings recogniion iming form accouning poin of view wih he sale resul economical revenues. Anyhow, he fuure accrual iems are ofen based on informaion and esimaions ha mus be correced in profi and fuure accrual iems if hey are wrong. For insance, if he proceeds from a receivable accoun are lower han he iniial esimaion hen he nex regisraion would regiser he esimaion error; while he heoriss believe ha he esimaion error and consequence correcing reduces he beneficial role of he accrual iems. Therefore he accrual iems' qualiy and he profi's qualiy would decrease while facing he esimaion error. For example, from Palepu's () viewpoin he esimaion error is a facor which reduces he accouning qualiy. He believes ha esimaion's accuracy and exacness depends on firm's characerisics such as exchanging complexiy and firm's environmen anicipaing abiliy. -- The qualiy of accrual iems Generally here are los of reasons ha reduce he profiabiliy of accrual iems. One of hese facors is he esimaion. For example, Palepu e al () believe ha he esimaion error is one of he main facors ha reduce accouning qualiy and he esimaion error depends on he firm's characerisics such as exchanges complexiy and he firm's environmen anicipaing abiliy. If he profi managemen doesn' exis he accrual iems' qualiy will be affeced by he rading and indusrial uni's characerisics and hose characerisics are usually visible and repeaable. For insance, he possibiliy of esimaion error occurrence increases wih he operaion swing and in opposie he profi managemen facors are no usually visible and are emporary (Dechow-Dichev, ). The aim of his research like Dechow-Dichev's is he division of he inenional esimaion error from he uninenional esimaion error because any kind of error causes reducion in accrual iems' qualiy and profi's qualiy. -3- The exising models of examining he accrual iems' qualiy The accrual sysem is one of he main pars in financial accouning. The accrual iems moderae he cash flows for he repored profi and make he basis of he balance shee. Despie he imporance of accrual iems in financial accouning, here are a few models in accouning lieraure for sudying he accrual sysem (Guay, 6). Iniial sudies used o use simple sandards such as oal accrual iems (Healy, 198) and changes in oal accrual iems (DeAngelo, 1986) for measuring he qualiy of accrual iems (he larger he sandard he lower he qualiy of accrual iems). Much recen sudies use he regression of accrual iems and specific financial variables which are relaed o common accrual iems such as income changes, operaional profi or operaional cash flows for esimaing he common level of he accrual iems; as ha regression's remainder indicaes he uncommon accrual iems. Generally he uncommon accrual iems are considered as an indicaor for esimaing he qualiy of accrual iems. Researchers such as Dechow, sloan and Sweeney (199), Dechow, Kohari and Was (1998) use he regression remainder for esimaing he uncommon accrual iems. They placed he oal accrual iems as a funcion of sale and fixed asses 647

3 J. Basic. Appl. Sci. Res., 3(1)646-64, 13 changes in a model for esimaing he accrual iems (Johns, 1991). And in anoher model he working capial's accrual iems were considered as a funcion of he rading uni's sale aciviies and operaional cash flows of he pas, presen and fuure (Dechow, Kohari and Was models, 1998). Johns' accrual iems' model was creaed in The aim of Johns' model is o examining managemen's inenional esimaion error. Today i is used for esimaing he qualiy of accrual iems. This model as i was said before is as below: Jonesmod el : Acc 1 REV GPPE Equaion (1) I expeced ha in above equaion he income changes' coefficien 1 would be posiive and he fixed asses' coefficien would be negaive. I means ha Johns believes ha accrual iems have posiive relaion wih income changes and negaive relaion wih fixed asses. Johns' model divides he oal accrual iems ino common iems (accrual iems' common componens have relaion wih income changes and fixed asses changes) and uncommon componens (he difference beween accrual iems' se and common accrual iems). This model is used for managemen appraisal profi; as i examines he uncommon accrual iems' behavior in he range of an even (for insance, while sock proposal), in his model he more he specified uncommon componens of accrual iems he lower he qualiy of accrual iems would be (Guay, 6). Dechow-Dichev's models and he cash flows (CF) emphasize on he relaion beween accrual iems and pas, presen and fuure cash flows which are as below: CF mod el : Equaion () Acc 1CF DDmod el : ACC CF 1 CF CF Equaion (3) ACC Is he oal accrual iem and CF T-1, CF T, CF +1 are respecively he cash flow in pas, presen and fuure period. Johns, DD and CF models have his similar idea ha accrual iems increase he profi's benefi by smoohing he emporary swings of he cash flows. For insance, consider he previous period's commodiies' balance increase which has been sold as a credi in he presen period and is cash would be received in he nex period so as a resul he cash flow in he previous period would be negaive and in presen period ha he profi obaining has been compleed i would be zero and posiive in he nex period. This emporary swing reduces he benefi of cash flows for he firm's performance appraisal oward he profi. Accrual iems are a funcion of he rading uni's real urnover and he rading uni's real urnover is impressed by is sale. Johns spos he sale changes direcly in his model, bu in DD and FC models he curren cash flow is only used. The used accrual iems' model in DD research is for accrual iems relaed o he working capial accrual iems. The reason o his is ha he cash flow relaed o he working capial occurs during a year and makes he empirical and pracical examinaion simple and possible. Despie ha we know he esimaion error includes all he accrual iems bu we only use shor erm accrual iems in (DD) model due o grea inerval beween non-curren accrual iems and heir cash flow realizaion. To calculae he qualiy of working capial accrual iems, he inroduced equaion by DD can be used ha is as below: WC b b1 CFO 1 b CFO b3 CFO 1 WC Equaion (4) In he research by Dechow-Dichev i is calculaed by below formula: WC AR Invenory AP TP OherAsses(ne) Equaion () In above formula we have: WC Working capial changes; AR = Receivable accouns changes; Inverory = commodiies' balance changes; AP Payable accouns changes; TP Payable ax changes; OherAsses(ne) Oher curren non-cash asses changes; The remainder from he equaion (4) indicaes hose accrual iems which don' have adhesion o he realizaion of he cash flow; as he sandard deviaion of he error facor is he inroducer of accrual iems' qualiy. The more he sandard deviaion of he error facor he lower he accrual iems' qualiy would be. 648

4 Habibi e al., 13 In his research he main model of (DD) would be used. (DD) have used he accrual iems of working capial as he general agen of accrual iems and operaional cash flow in heir sudy in he field of accrual iems' qualiy. Because he accrual iems of working capial and he operaional cash flow are more checkable and usually he creaion and omission period of such accrual iems is one year long. They suppose ha he weak relaion of accrual iems of he working capial wih he operaional cash flow indicae he low qualiy of accrual iems. In he model in his research (DD model) he esimaion error of accrual iems is calculaed by he aid of he las year, presen year and fuure year's working capial changes' regression remainder and operaional cash flow. The remainder of his regression inroduces he accrual iems' esimaion error; he larger he error facor's sandard deviaion he lower he qualiy of accrual iems. From he viewpoin of Dechow-Dichev () he qualiy of accrual iems decreases by he accrual iems' esimaion error increasing. The qualiy of accrual iems has posiive relaion wih he profi sabiliy and he profi sabiliy is one of he ools for profi qualiy evaluaion; he lesser he profi sabiliy he lower he profi qualiy. The reducion in profi qualiy means ha he repored NET profi is differen from he economical uni's urnover resul. In such siuaion he reduced profi's informaion conain and lesser consumers can rely on his main elemen of financial liss in making decisions. Francis e al (3) concluded ha he qualiy of accrual iems affecs he financial securiy's cos. Moreover hey conclude ha he capial cos of firms wih low qualiy accrual iems is more. Ashbaugh and Lafond (3) examine he qualiy of accrual iems of working capial in inernaional level. Their resuls indicae ha he qualiy of working capial's accrual iems is higher in hose counries which heir financial and axing reporing are parly similar. The resuls of Ecker, Francis, Olsson and Schipper's () research indicae ha non-curren accrual iems have lower qualiy ha he curren accrual iems. According o heir resuls he qualiy of curren accrual iems can be a reliable ool for esimaing he oal accrual iems' qualiy. Their pracical resul is ha alhough he esimaion of he oal accrual iems' qualiy is possible for some limied firms bu such esimaion is no necessary because he curren accrual iems qualiy is an appropriae ool and a subsiue for he oal accrual iems' qualiy. In he research by Dasgir and Rasgar (1) he relaion beween firms' financial and non-financial feaures wih he qualiy of accrual iems has been examined. Therefore 9 firms had been examining ou of all he acceped firms in Tehran sock exchange during -7. The selecion approach is for hypoheses examinaion using cross secional daa. The measuring sandard of he qualiy of accrual iems in his research is he remainder iems of working capial's regression changes based on he operaional cash flows in he pas, presen and fuure periods. The resuls of his research indicae ha measurable financial and non-financial characerisics of a firm (such as firm's operaional cycle, firm's size, cash flows swing, accrual iems' swing, profi swing and he number of repored losses during differen periods) can be used as a ool for evaluaing he qualiy of accrual iems and he profi. According o resuls of his research he qualiy of accrual iems has posiive relaion wih he firm's size and negaive relaion wih oher examining characerisics. -4- Research Mehod The populaion of his research includes he acceped firms in Tehran sock exchange during he years 6-1; among which hose firms were seleced which possessed he following characerisics. Therefore he sampling mehod is omission mehod. The characerisics are: The firm mus be acceped in Tehran sock exchange before he year 6. Because saisic samples' number mus be equal in examining years. For having comparable iems he financial periods of he firms should ends on March 19. Those indusries should be examined which have a leas firms acivaing in hem. There should be a leas daa for each firm. Firms' exchanging symbol shouldn' be sopped more han 4 monhs. The firms should no be among invesmen and financial inermediaion firms. Research's necessary informaion abou he firms should be reachable. Finally, according o filers and firm's characerisics, 88 firms were seleced according o he rules above. And also according o he examinaions aken place in he lieraure and empirical basis, he following five hypoheses were seleced for he research: Research's main hypohesis: here is a significan relaion beween firm's characerisics and he qualiy of accrual iems. The following five hypoheses were seleced for his research: 1- There is a significan relaion beween firm's operaional cycle and he qualiy of accrual iems. - There is a significan relaion beween firm's size and he qualiy of accrual iems. 3- There is a significan relaion beween sale swing and he qualiy of accrual iems. 649

5 J. Basic. Appl. Sci. Res., 3(1)646-64, There is a significan relaion beween he number of repored losses during differen periods and he qualiy of accrual iems. - There is a significan relaion beween accrual iems' size and he qualiy of accrual iems. 3-Analysis In his research, firm's characerisics (firm's operaional cycle firm's size sale swing he number of repored losses during differen periods and accrual iems' size) have been examined as independen variables of research and he qualiy of accrual iems has been examined as dependen variable of he research; as he regression analysis has been used for examining he hypoheses. A firs he normaliy of final samples was examined using Kolmogorov Smirnov es which is resuls can be seen in Diagram (1). In he able (1) here are represened descripive saisics (average, sandard deviaion, firs quarer, middle and he las quarer). Table (1) descripive saisics daa Variables Average Sandard Deviaion CFO WC Asses Sale Accruals Firs Quarer Middle Las Quarer Q-Q Normal Plo Normal Mean SDev 1.7 N 93 KS.88 Percen daa Figure (1) For examining he hypoheses of he research and answering he quesions, he relaion beween he qualiy of accrual iems wih 1- operaional cycle, - firm's size, 3- sale swing, 4- he number of repored losses by he firm, - accrual iems' size has been examined. For calculaing accrual iems' qualiy sandard i is necessary obaining he remainder iems of he following regression model (6) for each firm and hen he menioned sandard deviaion of he regression remainder iems should be calculaed for each firm so he obained sandard deviaion would be he qualiy sandard for accrual iems as each firm which has lower sandard deviaion of remainder iems would possess higher accrual iems qualiy and vice versa. WC b b CFO b CFO b CFO Regression Equaion (6 Using he exised daa, above model has been esimaed for he ime period of 6-1 (he firs and final year has CFO been used for accessing he variables of 1 and CFO 1 ) and finally 88 firms were esimaed for a year period as synheic daa in he model above ha his esimaion's resuls have been briefed in ables (3) and (4). As i was menioned before, for esimaing he (6) regression, synheic daa has been used. In his mehod ime series and cross secional daa will be synhesized and will be used when i isn' possible o examine problems in ime series and cross secional form or when numbers of daa are a few. Synheic daa are used due o increase he observaion imes, o enhance he freedom degree, o decrease variance dissimilariy and variables dynamic sudy (Aflaouni and Nikbakh, 1, p88). There are hree models for esimaing he models: 1- The common effecs model; - The fixed effecs model; 3- The random effecs model; 6

6 Habibi e al., 13 While using he regression model i should be deermined ha among he synheic and cross secional daa which daa could define he exised relaion beween independen and dependen variables beer; so Chov's es (he bound F es) would be used in which he hypoheses will be regulaed as below: H : (Synheic Mehod) H 1 : The fixed effecs model Table () Saisics Prob F 1/879 /34 Table (3) Coefficien b b 1 Esimaion /8* /9* 9/37 13/16 Saisic Pr op * Significan a he level of /1 / / b -/66* -6/1 / b 3 /1* 9/3 / F saisic Table (4) Pr ob( F saisic) R R Adjused Durbin Wason 18/7 / / / 1/ I is done if he resuls from Chov's es indicae he supreme of he synheic model bu if he fixed effecs model urned ou o be supreme i mus be examined in opposie of he random effecs model so ha we can selec he more appropriae model for he esimaion and his examinaion will be done using Hussmann's es. The resuls are menioned in able () and hey indicae ha H has been acceped. Therefore he synheic model is supreme and here is no need using Hussmann's es. As i was expeced he b coefficien in model is negaive significanly ( Saisic -6/1 and b - /66) because according o equaion (7) which was described in nd chaper he more he realized cash in presen period he lower he size of accrual iems would be bu i is opposie abou he cash flows of pas and fuure periods A CF 1 ( CF CF ) CF 1 1 Equaion (7) The resuls from regression in each firm's level also suppor he resuls from synheic regression (he above resuls) bu as i was poined ou in 3 rd chaper he synheic regression has been used o make sure ha a non-diagonal esimaion is used due o each firm's shor ime series. The resuls from he regression in firm's level are as able (). Table () Coefficien Esimaion b /67 As he daa from able () indicae he coefficiens are conformed o he heory and also o he daa from able (3). Pierson correlaion beween working capial changes WC and he presen cash flows CFO, pas period's cash flows CFO and he fuure cash flows CFO also suppor above resuls. 1 1 b 1 /3 Table (6) pearson Correlaions b -/83 b 3 /168 CFO 1 CFO WC /1* -/118* (/) (/7) * Correlaion is significan a he level of /1 ** Correlaion is significan a he level of / CFO 1 /14** (/) Afer he qualiy sandard of accrual iems was calculaed using he remainder iems of regression model (6) for each firm in fac he dependen variables for nex models have been calculaed hrough which we examine research's hypoheses. 61

7 J. Basic. Appl. Sci. Res., 3(1)646-64, 13 Equaion (8) Sd. resid b b1 AVcycle b LOGasses b3sd. sale b4 Pr op. loss b AV WC H 1 : here is a significan relaion beween firm's operaional cycle and he qualiy of accrual iems. H : b H1 : b1 H : here is a significan relaion beween firm's size and he qualiy of accrual iems. H : b H1 : b H 3 : here is a significan relaion beween he amoun of sale swing and he qualiy of accrual iems. H : b H1 : b3 H 4 : here is a significan relaion beween he repored loss imes during differen periods and he qualiy of accrual iems. H : b H1 : b4 H : here is a significan relaion beween he size of accrual iems and he qualiy of accrual iems. H : b H 1 : b The resuls from model (8) esimaion are described in ables (7) and (8). Table (7) Coefficien b b 1 b b 3 b 4 b Esimaion Saisic Pr op /1* /44 /1 * Significan a he level of /1 ** Significan a he level of / 8/4* 3/6 / -/** -/71 / /* /17 /98 /11* 4/ / /19* / /1 F saisic Table (8) Pr ob( F saisic) R R Adjused Durbin Wason 7/7 / /48 /41 /1 The resuls of regression esimaion which have been represened in able (7) indicae ha b1 coefficien is significanly posiive ( Saisic 3.6 and b1 8.4) herefore here aren' enough evidences for accepance of H so i will be rejeced. According o he second hypohesis' es he calculaed coefficien amoun for LOGasses, namelyb, has been represened in able (7). The menioned coefficien's mark ( Saisic -.71 and b -.) indicaes ha wih he firm's size become larger he qualiy of accrual iems would increase. Therefore here aren' enough evidences for supporing he H and i will be rejeced. According o research's hird hypohesis he resuls of regression esimaion indicae ha Sd. sale coefficien ( saisic.17 and b 3.) is posiive. Bu i isn' significan in significan level of 9%, herefore here aren' enough evidences for rejecing he H and i will be acceped. According o he fourh hypohesis, he resuls from regression esimaion model (8) indicae ha he coefficien of Pr ob. loss which is b4 is significanly posiive ( saisic 4. and b3.11) herefore here isn' enough evidences for acceping he H and i will be rejeced. According o he fifh hypohesis he resuls from regression esimaion model (8) indicae ha he coefficien of AV. WC which is b 6

8 Habibi e al., 13 is significanly posiive ( saisic. and b acceping he H and i will be rejeced..19). Therefore here aren' enough evidences for 4- Conclusion Accouning profi is one of he main iems provided by he accouning sysem which is used by boh inernal organizaion and exernal organizaion consumers for making economical decisions. Performance appraisal of he economical uni, managemen reenion or deposiion, sock price changes, purchasing, sale and preserving he rading uni's sock, developmen, reducion or suspension of one or several segmens' aciviy are samples of hose maers which aking decisions abou hem is due o he rading uni's profi amoun. The imporance ha he accouning profi has for he inernal and exernal organizaion consumers has caused ha he rading uni's managemen dedicaes a special noice o he profi price and is providing and presening way. As i was said before, according o he accrual accouning sysem wheher he cash is received or paid, he income would be recognized as soon as he process is compleed, herefore a par of repored profi will be represened accrual iems form and since he cash amoun of an iem is concree and unchangeable, he managers focus on he profi's accrual iems for achieving heir goals in profi providing and is represening mehods. Due o his reason noicing o accrual iems is very imporan. In he presen research we have focused on examining he relaion beween a firm's characerisics wih he qualiy of profi's accrual iems. In his research Dechow-Dichev's approach (DD) has been used for evaluaing he qualiy of accrual iems. The approach (DD) is based on ha accrual iems are a realizaion of fuure cash flows; as he qualiy of accrual iems and profi is a funcion o he exacness of hese esimaions. The srucural reasons and special characerisics of he rading uni and also he economical facors can affec he exacness of hese esimaions, wihou noicing o he exisence or inexisence of managemen's inerferes in he financial reporing process. Research's five hypoheses have been done o examine he relaion beween firm's characerisics and he qualiy of accrual iems which is resuls are as below: The resuls from firs hypohesis es indicae ha he more he operaional cycle he more he qualiy of accrual iems would reduce. The resuls from second hypohesis es indicae ha he larger he firm's size he more he qualiy of accrual iems would increase. The resuls from he hird hypohesis es indicae ha here isn' any significan relaion beween sale swing and he qualiy of accrual iems. The resuls from he forh hypohesis es indicae ha he more he loss repored imes during differen periods he more he qualiy of accrual iems would reduces. The resuls from he fifh hypohesis es indicae ha he larger he size of accrual iems he more he qualiy of accrual iems reduces. Therefore, excep for he hird hypohesis which indicaes ha here isn' any significan relaion beween he sale swing and he qualiy of accrual iems, he ess of forh oher hypoheses indicae he exisence of a significan relaion beween firms' menioned characerisics and heir accrual iems' qualiy. REFERENCES 1. Aflaouni, A., Nikbakh, L., (1), The Usage of economeric in accouning research, Financial Managemen and Economic Science, 1s Ediion, Termeh Publicaions.. Dechow, P., Sloan, R., & Sweeney A. (199). "Deecing earnings managemen". The Accouning Review, 7, Ashbaugh, H.&LaFond, R.(3)". Reporing incenives and he qualiy of non-u.s firm's Working capial accruals ".Working paper, Universiy of Wisconsin. Rerieved March 14, 6, from hp:// 4. Dasgir, M, Khodadadi and Rasgar, M., (1), "The survey of relaion beween financial and non-financial characerisics of he firm wih is accrual iems' qualiy and profi", quarerly of sock exchange. No

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