Examination of the Relationship between Governance and Auditing Properties and Real Earnings Management of the Firms Listed in the Tehran Stock Exchange

Document Type : Research Paper

Authors

Associate Professor of Accounting, Islamic Azad University, South Tehran Branch, Tehran, Iran. Corresponding author

Abstract

The aim of this study is investigating the relationship between governance and auditing properties with real earnings management of the firms listed in the Tehran Stock Exchange. To conduct the study, 62 companies in the Tehran Stock Exchange during 2011 to 2015 were selected to test the hypothesis. Institutional ownership, gender diversity of board of director, independence of board of director, rating of auditing company and change of auditor were selected as independent variables and real earning management as dependent variables. Also, control variables include size and financial leverage. The results show that the institutional owners have significant and direct relationship with real earnings management. The results also show that there is a positive and significant relationship between presence of women as the board members and real earnings management. This is while no significant relationship was found between the other board features and the varieties of earnings management. The results indicate that when a company without an independent board of directors, changes into a company with independent board of directors, the mean of real earnings management decreases significantly. Finally, the results indicate a significant relationship between the audit cycle, audit rating and size of company with real earnings management. This is while the financial leverage does not have a significant impact on the real earnings management.

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References

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History

  • Receive Date: 23 January 2017
  • Revise Date: 02 June 2017
  • Accept Date: 15 May 2017

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