Accounting and Auditing Research

Accounting and Auditing Research

The Study of Value Relevance of Disaggregated Profitability Based on the New Framework of Financial Statements proposed by IASB & FASB, for Tehran Stock Exchange Companies.

Document Type : Original Article

Authors
Iman Momeni
Daryoush Foroghi
Hadi Amiri
Abstract
The purpose of this research is to study the effect of disaggregating the firm profitability on the information content of earning elements of financial statements. This study is a descriptive and analytical research and falls into the correlation-analytical regression research category.
In this paper, the staff draft of IASB & FASB (2010) regarding to changing the framework of financial statements, is used for profitability disaggregation into two elements of operating activities profitability and financing activities profitability. For this purpose, first we introduce the statement of comprehensive income proposed by IASB & FASB staff draft and compare its elements with the traditional statement of comprehensive income and income statement.
For performing this research, information of 181 firms from Tehran stock exchange has been accumulated and consolidated in the period 2002 to 2014. Also, for testing the hypothesis, we used the regression model analysis for pooled data in Eviews7 and Stata12 statistical soft wares.
The results show that disaggregated profitability into operating and financing segments has meaningfully higher value relevance with stock return in compare with aggregated year end profit.
Keywords
Disaggregated accounting profitability
Operating activities
Financing activities
Restructured Financial Statements
Accounting and Auditing Research
Volume 9, Issue 33
Spring 2017
Pages 24-41