A Study on the Relationship between Accounting Conservatism and Earnings Management in Teheran Stock Exchange Listed Companies

Abstract

The present study focuses on the link between accounting conservatism and earnings management in Teheran Stock exchange listed companies. To this aim, the researches selected a statistical sample consisting of 154 companies and gathered statistical data for time period from 1385 to 1390. Using multiple variable combinational regressions, the researchers extracted the proper research model and examined the research hypothesis. The models developed for conservatism and earnings management were respectively book value to market value ratio of the stockholders' equity, and Jones's adjusted model. Primarily, research findings indicated that the models are insignificant and a significant link between conservatism and earnings management does not exist. However, when the researches fitted the examination based on logarithm of conservatism, they found out that there is significant and negative link between conservatism and earnings management.