The Investigation of the Impact of Effective Factors on Accuracy of Forecasted Profits Made By Firms’ Management In Tehran Stock Exchange Market

Authors

1 Professor of Accounting, Shiraz University, Shiraz, Iran.

2 M.A. of Accounting, Shiraz University, Shiraz, Iran.

Abstract

Forecasted profits provides important information for investors and other users of financial statements. In recent years, a large number of studies have investigated the accuracy of forecasted profits made by company management. In this study, we investigate the effect of nine variables on accuracy of management earnings forecasts for firms in Tehran Stock Exchange Market. These variables include Growth Profit, Growth Sale, Growth Assets, Past Forecasted Profit, Dividend, Company Size, Leverage, Stock’s Price and Industry. Accuracy is measured by forecast errors, absolute forecast errors, squared forecast errors and natural logarithm of squared forecast errors.
 Using a sample of 77 firms in Tehran Stock Exchange Market within 1379-1383 years, our findings on simple regression model show that there are relationships between growth profit, growth sale, growth assets, past forecast profit, But there aren’t leverage, stock’s price and accuracy of earnings forecasts relationships between dividend, company size and accuracy of earnings forecasts. In addition, the results of the results of multiple regression model show that there are relationships between growth profit, leverage and accuracy of earnings forecasts.

Keywords

References

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History

  • Receive Date: 21 January 2007
  • Revise Date: 25 July 2007
  • Accept Date: 27 September 2007

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