Document Type : Original Article
Authors
1 Ph.D. Student, Department of Accounting, Shahrood Branch, Islamic Azad University, Shahrood, Iran
2 Assistant Professor, Department of Accounting, Shahrood Branch, Islamic Azad University, Shahrood, Iran
3 Associate Professor, Department of Accounting, Shahrood Branch, Islamic Azad University, Shahrood, Iran
Abstract
Forensic accounting, as a process of legal inspection of corporate accounting practices, has become an important strategy to prevent fraud and financial misconduct, creating information transparency for investors to make financial decisions. Among the capital market companies, oil companies can strengthen the forensic accounting paradigm to provide documentation and transparency of decision-making to prevent market distrust caused by investor risks and contribute to the sustainable development of its presence in advancing competitive strategies. This study aims to develop an effective forensic accounting paradigm based on the risks of investors in oil companies. In this study, the components (dimensions of forensic accounting) and research propositions (investor risk themes) were used to from a combined analysis with 15 accounting experts at the university level. In the quantitative part, the components and propositions identified in the form of matrix questionnaires were evaluated by the interpretive ranking process (IRP) by 20 financial managers of oil companies in the capital market. The results showed that the statements of inflation and credit risk as the most influential themes threaten investors in oil companies, strengthening the focus on legal mechanisms as a component of the forensic accounting paradigm. This result shows that, in the presence of inflationary and credit risks for oil companies’ investors, the importance of legal mechanisms in judicial accounting can lead to increased information transparency to protect the interests of oil companies’ investors
Keywords
- Capital market oil companies
- Forensic accounting paradigm
- Interpretive ranking process matrix
- Investor risks
Main Subjects
In fact, in the analysis of interpretive ranking process weights, it should be stated that the high weight of each component indicates the greater level of importance of that component in the target population. Based on this result, it should be stated that the most effective dimension of the forensic accounting paradigm in the presence of inflation risk as the most probable risk of oil companies’ investors is the legal mechanism of judicial accounting, which has the highest level of priority in the dimensions of the judicial accounting paradigm.
7. Conclusions
The growth of investment in the country and the increase in peripheral risks have led to the need to provide useful information to users, such as corporate risk disclosure. The complexities of new businesses have advanced science and technology and the increased risks of their use (Khayampour et al., 2020). The role of governments and their socio-economic, political, and strategic strategies in the course of their activities have also created proportionate risk components. On the other hand, the development of civil society and the need to establish new laws and regulations or amend old regulations to regulate socio-economic affairs in line with the paradigms emphasized by court accounting by these institutions increase the importance of aligning corporate changes with environmental changes such as market development. Money, capital, commodities have been accompanied (Akinbowale et al., 2020). By creating a determinable level of unpredictability of environmental changes, all of the above positive factors make the level of stakeholder investments more effective. Because the capital market environment is characterized by categories of market risk, liquidity risk, and credit risk, there is a risk of debt collection, and interest rate risk. Consolidating patterns such as court accounting can increase capital market transparency and create a more coherent perception of investors in the capital market (Digabriele et al., 2020). Therefore, this study aims to develop an effective forensic accounting paradigm based on the financial risks of oil company investors. Based on the research results, in response to the first and second questions of the research, three mechanisms of forensic accounting paradigm and seven risk statements of investors of oil companies were identified. Based on the results, it was found that the most probable risk of investors in oil companies are two statements of credit risk and inflation risk, which can seriously challenge the financing functions of oil companies in advancing investment projects. On the other hand, inflation risk, which refers to rising without price support, without increasing or changing the quality of profits expected by investors, causes oil companies to face a reduction in the power of investment funds in the development of their projects, and this will cause them to face the challenges of sustainability at the level of competition. Under the circumstances of these two propositions as the most probable risks of investors in oil companies, the need to pay attention to the legal accounting mechanism can be a reason to answer the third question of the research. In other words, supporting institutional rules and oversight while making companies’ operating frameworks more transparent will enable investors to invest in companies’ stocks with a clearer vision of their decisions. In fact, by defining its position and role, judicial accounting can help expedite the litigation process based on the collection of evidence of financial misconduct by the accounting unit of oil companies to settle lawsuits in the form of a speedy legal process. By understanding this, investors should plan their expected return on investment more purposefully. In fact, the legal dimension of judicial accounting seeks to determine any action contrary to professional standards and related laws, such as the constitution or the law on trade in oil companies. Moreover, it deals with the negligent or intentional conduct of the perpetrators of financial and accounting misconduct within the law to prevent potential harm to the interests of investors based on risk control. The results obtained by the research of Yang and Li (2020), Botes and Saadeh (2019), Hegzay et al. (2017), Kaimari Tivari and Dibnath (2017), and Rahmani et al. (2018) correspond to our findings. Based on the obtained result, it is suggested that the institutions monitoring the legal performance of oil companies, such as the Stock Exchange Organization, inform the companies of the necessary instructions regarding the need to use more information transparency, especially risk disclosure to strengthen the level of knowledge of investors of these companies about financial decisions and the attractiveness of investing in oil companies. For example, laying the groundwork for the development of forensic accounting to influence disclosure ratings or increase risk disclosure ratios among oil companies can create more incentives for firms to develop judicial accounting dimensions. In other words, trying to inject investors with the necessary incentive to invest concerning the money markets by developing understandable and common symbols in the oil industry can cause economic dynamism and alignment of capital market oil companies with strategies and prospects for the country’s economic development. It is also suggested that one of the basic strategies to improve the protection of investors’ interests is to amend existing laws and standards in order to reduce administrative mazes. This should lead to an increase in the level of more effective oversight in the disclosure of oil companies’ risk by changing the provisions of the commercial code, the code of civil procedure, and other related laws under the legal mechanisms of forensic accounting. These fundamental reforms can also be done in the form of laws called legal and forensic functions of corporate governance based on corporate structural mechanisms that include the adoption of rules in corporate governance so as to enhance the effectiveness of oversight of information functions.
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