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The Impact of the Asymmetric Behavior of the Costs on the Degree of Accounting Reservation in the Financial Reports of Iraqi Industrial Companies a Field Study of a Sample of Iraqi Industrial Companies
Corresponding Author(s) : Zainab Jaafar
American Journal of Economics and Business Management,
Vol. 5 No. 6 (2022): American Journal of Economics and Business Management
Abstract
The research aimed to identify the impact of the asymmetric behavior of the costs on the degree of accounting reservation in the financial reports of Iraqi industrial companies by understanding the asymmetric behavior of the costs and factors affecting it and determining the terms of the most inclined costs for asymmetric behavior, The field study was conducted on a sample of 50 individuals and internal auditors working in Iraqi industrial companies located in Basra Governorate and external auditors working in the Financial Supervision Bureau, Basra Branch, as well as a group of accounting and cost professors for accounting departments in Iraqi universities in Basra. The most important thing that the results of the field study revealed is that the asymmetric behavior of the costs affects the degree of accounting reservation through the theory of the agency and the method of profit management, and the results also resulted in a weakness in the knowledge of the financial and costly society of Iraqi industrial companies in the concept of asymmetric behavior. The researchers came out with several recommendations, the most important of which is the necessity of taking into account the asymmetric behavior of some of the costs in the stages of planning costs and oversight in order to control it and note the extent of the response of some costs to change the increase or deficiency with the change of the activity because this leads to the accuracy of the information contained in the financial statements and maximizing the return on Investments and emphasizing the importance of increasing the knowledge of the financial and costly society in Iraqi industrial companies in the concept of asymmetric behavior of costs through seminars to determine the contents of this concept.
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- Al-Mousawi, Hussein Jalil Mohsen, "The Impact of Corporate Governance Mechanisms on Accounting Conservatism Practices", a master’s thesis in Accounting submitted to the Board of the College of Administration and Economics, University of Baghdad, Iraq, 2016.
- Al-Saghir, Mohamed El-Sayed Mohamed, "The role of sticky cost in rationalizing profitability decisions and performance evaluation under the assumptions of agency theory", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 22, No. 2, 2019.
- Al-Zumar, Emad Saeed, "Measuring the interactive impact of the levels of asymmetry of cost behavior and profit management practices in real activities on the quality of accounting profits", Journal of Accounting Thought, Faculty of Commerce, Cairo University, Volume 24, Issue 4, 2020.
- Banker, Rajiv D, Byzalov, Dmitri & Chen, Lei (Tony)," Employment Protection Legislation, Adjustment Costs and Cross-country Differences in Cost Behavior", 2013.
- Bosch, Josep Argilés & Blandón, Josep García, "The influence of size on cost behavior associated with tactical and operational flexibility”, Estudios de Economia, vol. 38, N.2, 2011.
- Dadson, Martha & Ardeshir, Roya,"Impact of Managerial Incentives on Cost Stickiness in Swedish Listed Firms", Degree project in Accounting and Finance,2019.
- El-Habashy, Hanaa, "The Impact of Accounting Conservatism on Corporate Performance Indicators in Egypt”, International Journal of Business and Management, Vol. 14, No. 10, 2019.
- El-Zaki, Lamia Kamal Mahmoud, "The Impact of Asymmetric Behavior Risks of Cost on the Value of the Firm", The Scientific Journal of Commercial and Environmental Studies, Faculty of Commerce, Suez Canal University, Volume 10, Issue 3, 2019.
- Ezz El-Din, Mustafa Haroun and Al-Sharif, Bakr Ahmed Hussein, "Corporate Governance Mechanisms and their Role in Achieving the Effectiveness of Accounting Conservation", Journal of Administrative Sciences, Al-Khartoum, International University of Africa, Issue 3, 2019.
- Hammad, Mustafa Ahmed Mohamed, "The Role of Conditional Accounting Conservation in Reducing Profit Manipulation Practices and Its Impact on the Efficiency of Investment Decisions", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 22, No. 3, 2018.
- Han. Shipeng, Rezaee. Zabihollah& Tuo. Ling, "Is cost stickiness associated with management earnings forecasts", Asian Review of Accounting,2018.
- Ioannis ,Tzillas, “Cost Stickiness and Ownership Structure in Greek Companies", A thesis submitted for the degree of Master of Science (MSc) in in International Accounting, Auditing and Financial Management,2018.
- Kama, Itay &Weiss, Dan, " Do Earnings Targets and Managerial Incentives Affect Sticky Costs?", Journal of Accounting Research, 2012.
- Kim, J., J. Lee & J. Park,"Internal Control Weakness and the Asymmetrical Behavior of Selling, General, and Administrative Costs." General, and Administrative Costs ,2014.
- Meligi, Magdy Meligi, "The Impact of the Ownership Structure and Characteristics of the Board of Directors on Accounting Conservatism in Financial Reports - Evidence from the Egyptian Environment", The Scientific Journal of Trade and Finance, Tanta University, Vol. 2, No. 2, 2014.
- Menicucci, Elisa & Paolucci, Guido,"Forward-looking information in integrated reporting: A theoretical framework", African Journal of Business Management, Vol. 12, 2018.
- Montash, Abdel Hamid Abdel Moneim, "Measuring the reflection of two-way cost on the accuracy of the outputs of the management accounting system", published doctoral thesis, Cairo University, Faculty of Commerce, 2015.
- Muhammad, Tamer Saeed Abdel Moneim, "Measuring and analyzing the impact of the level of conditional and unconditional accounting conservatism when preparing financial reports on the risks of declining operating cash flows - an applied study", Journal of Accounting Thought, Al-Madina Higher Institute of Management and Technology, Vol. 23, No. 2, 2019.
- Obaid, Iman Muhammad, "The Impact of Accounting Conservatism in Financial Reports on the Market Value of Jordanian Public Shareholding Companies Listed on the Amman Stock Exchange", Master’s Thesis, College of Graduate Studies, Zarqa University, Jordan, 2017.
- Porporato, Marcela & Werbin, Eliana, "Active Cost Management in banks: Evidence of sticky costs in Argentina, Brazil and Canada", 2010.
- Salim, Karrar, "Accounting Conservative Practices and Their Impact on Improving the Efficiency of Investment Decisions and Enhancing the Value of the Company", Al Ghari Journal of Economic and Administrative Sciences, Vol. 14, No. 3, 2017.
- Shaheen, Mohamed Ahmed, "A proposed accounting framework for using the irregular behavior model of costs in determining the most effective activity driver", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 22, No. 3, 2018.
- Soenjoto,Emillio Antonelli & Alfiandri,"The Asymmetrical Cost Behavior: Cost Stickiness in Indonesian Listed Manufacturing Companies", International Journal of Accounting and Taxation, Vol. 7, No. 1, 2019.
- Suleiman, Mohamed Mahmoud and Baghdadi, Ahmed Baghdadi, "The relationship between tax avoidance and asymmetric cost behavior", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 23, No. 3, 2019.
- Youssef, Mohamed Abdel Moneim,"Characteristics and Determinants of sticky Costs", Saudi Accounting Association, Accounting Journal, Issue 62, 2019.
References
Al-Mousawi, Hussein Jalil Mohsen, "The Impact of Corporate Governance Mechanisms on Accounting Conservatism Practices", a master’s thesis in Accounting submitted to the Board of the College of Administration and Economics, University of Baghdad, Iraq, 2016.
Al-Saghir, Mohamed El-Sayed Mohamed, "The role of sticky cost in rationalizing profitability decisions and performance evaluation under the assumptions of agency theory", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 22, No. 2, 2019.
Al-Zumar, Emad Saeed, "Measuring the interactive impact of the levels of asymmetry of cost behavior and profit management practices in real activities on the quality of accounting profits", Journal of Accounting Thought, Faculty of Commerce, Cairo University, Volume 24, Issue 4, 2020.
Banker, Rajiv D, Byzalov, Dmitri & Chen, Lei (Tony)," Employment Protection Legislation, Adjustment Costs and Cross-country Differences in Cost Behavior", 2013.
Bosch, Josep Argilés & Blandón, Josep García, "The influence of size on cost behavior associated with tactical and operational flexibility”, Estudios de Economia, vol. 38, N.2, 2011.
Dadson, Martha & Ardeshir, Roya,"Impact of Managerial Incentives on Cost Stickiness in Swedish Listed Firms", Degree project in Accounting and Finance,2019.
El-Habashy, Hanaa, "The Impact of Accounting Conservatism on Corporate Performance Indicators in Egypt”, International Journal of Business and Management, Vol. 14, No. 10, 2019.
El-Zaki, Lamia Kamal Mahmoud, "The Impact of Asymmetric Behavior Risks of Cost on the Value of the Firm", The Scientific Journal of Commercial and Environmental Studies, Faculty of Commerce, Suez Canal University, Volume 10, Issue 3, 2019.
Ezz El-Din, Mustafa Haroun and Al-Sharif, Bakr Ahmed Hussein, "Corporate Governance Mechanisms and their Role in Achieving the Effectiveness of Accounting Conservation", Journal of Administrative Sciences, Al-Khartoum, International University of Africa, Issue 3, 2019.
Hammad, Mustafa Ahmed Mohamed, "The Role of Conditional Accounting Conservation in Reducing Profit Manipulation Practices and Its Impact on the Efficiency of Investment Decisions", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 22, No. 3, 2018.
Han. Shipeng, Rezaee. Zabihollah& Tuo. Ling, "Is cost stickiness associated with management earnings forecasts", Asian Review of Accounting,2018.
Ioannis ,Tzillas, “Cost Stickiness and Ownership Structure in Greek Companies", A thesis submitted for the degree of Master of Science (MSc) in in International Accounting, Auditing and Financial Management,2018.
Kama, Itay &Weiss, Dan, " Do Earnings Targets and Managerial Incentives Affect Sticky Costs?", Journal of Accounting Research, 2012.
Kim, J., J. Lee & J. Park,"Internal Control Weakness and the Asymmetrical Behavior of Selling, General, and Administrative Costs." General, and Administrative Costs ,2014.
Meligi, Magdy Meligi, "The Impact of the Ownership Structure and Characteristics of the Board of Directors on Accounting Conservatism in Financial Reports - Evidence from the Egyptian Environment", The Scientific Journal of Trade and Finance, Tanta University, Vol. 2, No. 2, 2014.
Menicucci, Elisa & Paolucci, Guido,"Forward-looking information in integrated reporting: A theoretical framework", African Journal of Business Management, Vol. 12, 2018.
Montash, Abdel Hamid Abdel Moneim, "Measuring the reflection of two-way cost on the accuracy of the outputs of the management accounting system", published doctoral thesis, Cairo University, Faculty of Commerce, 2015.
Muhammad, Tamer Saeed Abdel Moneim, "Measuring and analyzing the impact of the level of conditional and unconditional accounting conservatism when preparing financial reports on the risks of declining operating cash flows - an applied study", Journal of Accounting Thought, Al-Madina Higher Institute of Management and Technology, Vol. 23, No. 2, 2019.
Obaid, Iman Muhammad, "The Impact of Accounting Conservatism in Financial Reports on the Market Value of Jordanian Public Shareholding Companies Listed on the Amman Stock Exchange", Master’s Thesis, College of Graduate Studies, Zarqa University, Jordan, 2017.
Porporato, Marcela & Werbin, Eliana, "Active Cost Management in banks: Evidence of sticky costs in Argentina, Brazil and Canada", 2010.
Salim, Karrar, "Accounting Conservative Practices and Their Impact on Improving the Efficiency of Investment Decisions and Enhancing the Value of the Company", Al Ghari Journal of Economic and Administrative Sciences, Vol. 14, No. 3, 2017.
Shaheen, Mohamed Ahmed, "A proposed accounting framework for using the irregular behavior model of costs in determining the most effective activity driver", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 22, No. 3, 2018.
Soenjoto,Emillio Antonelli & Alfiandri,"The Asymmetrical Cost Behavior: Cost Stickiness in Indonesian Listed Manufacturing Companies", International Journal of Accounting and Taxation, Vol. 7, No. 1, 2019.
Suleiman, Mohamed Mahmoud and Baghdadi, Ahmed Baghdadi, "The relationship between tax avoidance and asymmetric cost behavior", Journal of Accounting Thought, Faculty of Commerce, Ain Shams University, Vol. 23, No. 3, 2019.
Youssef, Mohamed Abdel Moneim,"Characteristics and Determinants of sticky Costs", Saudi Accounting Association, Accounting Journal, Issue 62, 2019.