The Role of Earnings Management in Economic Growth and Corporate Growth Illusion

Subject Areas : Financial Accounting

Leila Zamanianfar ¹ , Fraydoon Rahnamay Roodposhti ² , Bahman Banimahd ³ , Hashem Nikoomaram ⁴ , Zahra Deilami ⁵

1 - Department of Accounting, Faculty of Management and Economic, Science and Research Branch, Islamic Azad University, Tehran, Iran
2 - Department of Accounting, Faculty of Management and Economic, Science and Research Branch, Islamic Azad University, ,Tehran, Iran
3 - Department of Accounting, Faculty of Management and Accounting, Karaj Branch, Islamic Azad Uni-versity, Karaj, Iran
4 - Department of Accounting, Faculty of Management and Economic, Science and Research Branch, Islamic Azad University, ,Tehran, Iran
5 - Department of Accounting, Faculty of Financial Sciences, Kharazmi University, Tehran, Iran

Received: 2020-05-18 Accepted : 2020-12-31 Published : 2021-10-01

Keywords: Overvaluation, Earnings Management, Economic Growth, Corporate Growth Illusion,

Abstract :

The most comprehensive criteria for evaluating management performance is economic value added, accounting added value, and over-valuation, which can best reflect how managers operate because of the information content that they provide. Therefore, considering the importance of earnings, this study investigates The Role of Earnings Management in Economic Growth and the Corporate’s Growth Illusion in Tehran Stock Exchange during the period 2012-2018 using systematic elimination method of information of 150 selected companies. The study data and theoretical foundations were collected through library studies. Hypotheses were tested using correlation method and multivariate regression. The results showed that with increasing in real earnings management, economic value added and accounting added value also increased. Also, with the increase in revenue earnings management, economic value added and accounting added value also increase. But there was no significant relationship between accrual earnings management and income with accounting added value. There is a positive significant relationship between actual earnings management resulting from abnormal and overvaluation operating cash flows and, there is a positive and significant relationship between accrual earnings management and overvaluation.

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