Investigating the Relationship between Earnings Management and the Stock price bubble of the Firms Accepted in Tehran Stock Exchange

Subject Areas : Financial Accounting

Hassan Zalaghi ¹ , Masoume Ghasemi ² , Reza Madadian Moez ³

1 - Department of Accounting, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran
2 - Department of Accounting, Alvand Non-Profit Higher Education Institute, Hamedan, Iran
3 - Department of Accounting, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran

Received: 2021-06-07 Accepted : 2021-11-11 Published : 2022-07-01

Keywords: Earnings Management, Capital Market, Stock price bubble,

Abstract :

Capital market is considered one of the most important channels in appropriating the financial resources optimally, and any disruption occurs in it will encounter the appropriation of financial resources in the economics of each country with a serious problem. The economic bubble is one of the reasons disrupting capital appropriation. Generally, when there is a difference between the price of a share and its expected price in the future, the economic bubble issue is considered. The economic bubble will face investors by choosing the best investment opportunities. It will finally deviate the process of equipping and appropriating the resources optimally from its principled path. The present study aims at investigating the relationship between earnings management and economic bubble. To achieve this purpose, the number of 109 companies has been studied from 2008 to 2018. The study's hypothesis was tested through a multivariate regression method and panel data method and utilizing Eviews9. The findings show a significant relationship between earnings management and economic bubble, which shows that besides the external factors, the managers' behavior may influence the generation of the economic bubble.

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