Using of Dupont Analysis with Emphasis on Earnings Management and Performance Management in predicting profitability of the insurance industry

Subject Areas :

Seyed fakhreddin Fakhrhosseini ¹ , Meysam Kaviani ²

1 - Associate Professor, Department of Accounting, Management and Accounting faculty, Islamic Azad University Tonekabon Branch, Tonekabon, Iran
2 - Assistant Professor, Department of Finance, Management and Accounting faculty, Islamic Azad University Karaj Branch, Alborz, Iran

Received: 2022-09-26 Accepted : 2023-02-13 Published : 2023-01-21

Keywords: Insurance Industry, Earnings Management, profitability, Financial ratios, DuPont ratio,

Abstract :

One of the goals of financial reporting is to provide useful information to facilitate decision making. Accounting information system is one of the sources of information provision for users to decide. The use of the Dupont analysis as a tool for measuring performance dates back to the 1920s and its ability to use it to predict profitability is one of the interesting issues of financial management and investment. The present article seeks to answer the question of whether the components of the Dupont ratio, with emphasis on profit and performance management, can be used to predict operating profitability in the insurance industry. So, in order to investigate this, 14 insurance industry companies were selected as systematic sampling method. The data collected during a period of 6 years and between 2015 and 2020 are taken into account that the results of regression analysis show that the marginal changes in earnings at 99% confidence level have a significant effect on future profitability as well as performance management It can affect the profit margin through the margin of profit, and profit management (upward and downward) does not affect the profit margin on future profitability