Accounting Asset Informativeness According to Innate and Discretionary Factors: The effect of Standards Implementation Quality and Fundamental Factors

Objective: Accounting assets are an important source of current and future decisions of companies, which bring a lot of information from the input of the company's value creation process. Assets information is relevant and valuable and can help the users of the company's financial statements to make informed decisions. The degree of awareness of assets may be different according to the factors under the authority of the management (optional factors) and factors related to the company's activity environment (intrinsic factors). Intrinsic factors such as business fundamentals, operating environments, and reporting fundamentals are largely outside of management's day-to-day control. Also, discretionary factors such as short-term operational decisions and how management applies accounting rules are under the daily control of management. Therefore, it is expected that the level of awareness of assets in companies is different according to the inherent and optional factors and according to the general state of awareness of assets. Also, the explanatory power of fundamental factors and the quality of implementation of accounting standards in companies are effective on the awareness of assets. The current research examines the accounting assets informativeness according to inherent and optional factors, the effect of the standards implementation quality and fundamental factors.

Method: In this regard, the first research hypothesis states that accounting assets have the power to inform the company's future operating earnings. Also, the second and third hypothesis of the research states that the accounting assets informativeness is different in terms of inherent and optional factors compared to the general level of accounting assets informativeness. Finally, the fourth hypothesis states that the fundamental variables have a different effect on the explanatory power of the accounting assets informativeness. Finally, the fifth hypothesis states that the standards implementation quality has a positive effect on the accounting assets informativeness. In order to calculate the awareness power of assets, a 10-year rolling regression has been estimated as a time series for each company, and its determination coefficient (R-squared) has been considered as the explanatory power of accounting profit through accounting assets. Also, to determine the Standards Implementation Quality, the restatements has been used. In order to collect data, based on the method of systematic elimination, 249 companies were selected from the companies admitted to the Tehran Stock Exchange for the period of 2002-2023. Also, To test the second and third hypotheses, the mean comparison test was used and to test the first, fourth and fifth hypotheses of the research, multivariate regression with panel data and Ordinary Least Squares (OLS) and robust method have been taken.

Results: The results showed that net operating assets have the power to inform about the future conditions of the company and the level of awareness of accounting assets is different according to inherent and optional factors. Also, the fundamental variables have a different effect on the explanatory power of the accounting asset awareness criterion according to the inherent factors and total factors. In addition, the quality of the implementation of accounting standards has a positive effect on the awareness criterion of accounting assets.

Conclusion: It can be stated that the reported amounts of operating assets are the primary source of information about production capacity, which provides important input information for creating stable cash flow. In fact, it summarizes all the information of past investments and, on the other hand, is a determining factor for future investments. Also, considering the operating environment in the form of inherent factors and the company's conditions in the form of optional factors improves the explanatory power of accounting assets. Also, The explanatory power of the fundamental factors shows the high information load of the asset awareness. Finally, the implementation of low-quality accounting standards increases the probability of errors in the reported assets and reduces their consumption.

The obtained findings have important messages for market stakeholders, management, board of directors and researchers. Investors and creditors are advised to pay attention to the information related to the assets while evaluating the information of the companies for investment. Because the results showed that operational assets have a set of current and future investment and operational information that shows the company's future vision. In order to have strong information about the company's conditions, analysts are suggested to pay special attention to the information available in the accounting assets in addition to examining the fundamental factors of the share. In this way, to choose stocks with real value and guarantee their future profitability. It is suggested to the standard setters, to improve the quality aspect of accounting standards, to pay attention to the awareness quality of accounting assets and improve the design of the accounting information system by paying attention to the assets. Because by creating a strong information environment and improving the accounting system, not only the position of accounting and its reports will be improved, rather, by providing appropriate information to the stakeholders of the capital market, attention to the capital market will increase and economic prosperity will be created