Recovering Financial Statements of Oil Refining Companies under Free Market Conditions and its impact on the Assessment of their Financial Performance

Document Type : Original Article


1 Assistant Professor, Department of Accounting, Sistan and Baluchestan University, Iran

2 MSc Accounting, Member of Iranian Association of Certified Public Accountants, Iran (Corresponding author)

3 MSc Accounting, Sistan and Baluchestan University, Iran


The emergence of economic crises has forced countries to reform the development strategy with a view to improving economic management. The intervention of governments in the free functioning of the market to reduce social problems by paying subsidies in general and fixing prices have a lot of problems Which makes the information provided by the companies unrealistic and unviable. The most important advantage of the capital market is the transparency of information that despite the existence of huge subsidies in the refining industry (which have a huge contribution to Iran's economy) the clarity of information and the real performance of this industry have been distorted. In this research, the oil refining industry has been evaluated and while revising the financial statements in terms of price liberalization and the elimination of government subsidies, the financial performance of the companies has been evaluated. To test the research hypotheses, data were collected from 7 refineries in Tehran Stock Exchange for the period of 2006-2016. The analysis of hypotheses was done using multivariate model and combined data. The results of the research show that financial performance has a significant difference before and after price liberalization.


1)     Abass zade, B., & Eltejaii, E. (2017). Impacts of Privatization on Profitability and Labor Productivity of Privatized Companies in Iran. New Economy and Trade, 11(3), 1-22. (in Persian)
2)     Abounoori, A., Jafari-Samimi, A., & Mehnatfar, Y. (2006). An Empirical Based Analysis of Economic Effects of Subsidized Gasoline on Its Consumption in Iran. Journal of Iran’s Economic Essays, 3(5), 33-58. (in Persian)
3)     Alami, M. (2014). Effect of Privatization on the Performance of Privatized Companies in Iran. MS Thesis, Ershad Damavand Institute of Higher Education, Damavand. (in Persian)
4)     Alcott, H., Lederman, D., & Lopez, R. (2006). Political Institutions, Inequality, and Agricultural Growth: The Public Expenditure Connection. The World Bank, Policy Research Working Paper, Series No.3902, 42.
5)     Alizadeh, M. (2010). The Effects of Implementing the Targeted Subsidies. the Economy of Country, (8), 96-107. (in Persian)
6)     Bacidore, J. m., Boquist, J. A., Milbourn, T. T. & Thakor , A. V. (1997). The search for the best financial performance measure. Financial Analysts Journal, 53(3), 11-20.
7)     Baum, A. & Turner, N. (2004). Retention rates, reinvestment and depreciation in European office markets. Journal of Property Investment & Finance, 22(3), 214-235
8)     Brown, C. & Abraham, F. Sum of Perpetuities Method for Vauing Stock Prices, Journal of Economics (03616576), Vol. 38, No. 1, pp., 2012.
9)     Dehghani, F., & Maghsoudi, A. (2011). An Examination on the Effects of Targeted Subsidies on Energy Industries Majlis Research Center, Office of Energy Studies, industry and Mining. (in Persian)
10)  Devinney, T. M., Richard, P. J., Yip, G. S & Johnson, G. (2004). Measuring Organizational Performance in Management Research: A Synthesis of Measurement Challenges and Approaches. Australian Graduate School of Management, Presented in AOM Conference.
11)  Dubo, I. (2003). "Impact of Energy Subsidies on Energy Consumption and Supply in Zimbabwe: Do the Urban Poor Really Benefit?. Energy Policy. 31(15), 1635- 1645.
12)  Horcher. & Karen, A. (2011). Essentials of financial risk management. (Vol.32): John Wiley & Sons
13)  Hoseininasab, E., & Hazeri Niri, H. (2012). Computable General Equilibrium Analysis of the Effect of Energy Carrier’s Subsidies Reform on Inflation and GDP. Economic Growth and Development Research, 2(7), 67-80. (in Persian)
14)  Hosseini, H., Fathi, A., & Elahi, sh. (2006).  Designing a Pattern for the Effects of Information Technology on Financial Performance Measures with a Meta-Analysis approach, The Iranian Accounting and Auditing Review, 13(4). 61-83. (in Persian)
15)    Jebelameli, F., & Gudarzi Farahani, Y. (2015). The Effect of Subsidy Reform on Energy Consumption in Iran: A Case Study of Gasoline, Oil, and Gas Oil Consumption. Majlis & Rahbord, 22(81), 69-89. (in Persian)
16)  Jiang, Zh. & Tan, J. (2013). How the removal of energy subsidy affects general price in China: A study based on input–output model. Energy Policy, 63(1), 599-606.
17)  Khanmohammadi, M. H., & Gharahdaghi, A. A. (2014). Comparison Check on the Performance by Delegated Companies, Before and After Delegation Based on Model and Some Financial Indicators. Audit Science, 14(57), 107-127. (in Persian)
18)  Khodabakhshi, A., & Karami, F. (2016). Comparison of the Effect of Subsidies Targeted Policy of Oil and Gas Manufactured on Growth of the Industry, Agriculture and Services Sectors. Applied Economics Studies in Iran, 5(18), 221-242. (in Persian)
19)  Khodavaisi, H., Montakhab, M., & Azizi, M. M. (2016). The Impact of Subsidies Targeting on Iranian Sugar Industry. Agricultural Economics Research, 8(32), 1-18. (in Persian)
20)  Lin, B. & Jiang, Z. (2011). Estimates of Energy Subsidies In China And Impact of Energy Subsidies Reform. Energy Economics., 33(2), 273-283.
21)  Maleki Totunchi, S. (2006). Effects of Exchange Rate Fluctuations on Macroeconomic Variables (Inflation, Total Production with Emphasis on Non-Oil Exports.  MS Thesis, Shahid Beheshti University, Tehran. (in Persian)
22)  Mohammadi, T., Pajhooyan, J & Abbaszadeh, SH. (2011). Effects of Removing energy Subsidies on Gross Domestic Product in Iran.  Journal of Applied Economics, 2(4), 1-24. (in Persian)
23)  Nejat, A., Shahbazi, M., & Javaheri Kamal, M. (2010). Investigating the Effect of Privatization on Accepted State-owned Corporate Performance in Tehran Stock Exchange. Trade Studies, 14(55), 75-105. (in Persian)
24)  Raymond, P & Neveu. (1989). Fundamentals of managerial finance. cincinnati ohio, South-western publishing company.
25)  Sharifi, H., Honarvar, N., &  Mohammadi, M. (2012). Effects of long-term subsidies elimination of energy carriers, oil, gas and electricity on the level of production and inflation in Iran. Iranian Journal of Energy, 15(1), 59-80. (in Persian)
26)  Siddig, K., Aguiar, A., Grethe, H., Minor, P. and Walmsley, T. (2014).  Impacts of removing fuel import subsidies in Nigeria on poverty, Energy Policy,. 69, No. pp. 165-178, 2014.
27)  Walter, J. E., (2017). Dividend policies and common stock prices, the Journal of Finance, 11, No. 1, pp. 29-41, 1956.
28)  Yalcin, N., Bayrakdaroglu, A., & Kahraman, C. (2012). Application of fuzzy multi-criteria decision making methods for financial performance evaluation of Turkish manufacturing industries. Expert systems with Applications, 39(1), 350-364.
29)  Zamanzadeh, H. (2011). Targeted Subsidies:  Achievements, Costs and Challenges. New in Economics. 9(133), 108-116. (in Persian)