The Effect of Enterprise Risk Management on the Relationship between External Financing and Earnings Management

Subject Areas :

محمد حسین پوراحمدی ¹ , غلامرضا فرساد امان الهی ²

1 - گروه حسابداری،واحد تهران مرکزی، دانشگاه آزاداسلامی، تهران، ایران.
2 - استادیار گروه حسابداری دانشگاه ازاد اسلامی واحد تهران مرکزی، تهران، ایران

Received: 2020-12-28 Accepted : 2021-03-01 Published : 2021-04-21

Keywords: Earnings Management, External Financing, Real Earnings Management, Keywords: Enterprise Risk Management, Accruals Earnings Management,

Abstract :

Enterprise Risk Management can identify, measure, control and play a supervisory role, or influence the quality of the company's control mechanism in strategic managerial decisions when implementing external financing policies. In this paper, the effect of enterprise risk management on the relationship between external financing and earnings management of 118 companies has been discussed. Risk management indicators in four dimensions are competitive advantage, operational efficiency, quality and reliability of the report, and industry competitiveness. The Jones method was also used to measure earnings management. Research findings suggest that enterprise risk management affects earnings management as well as external financing on earnings management. Eventually, enterprise risk management was affected by the relationship between external financing and earnings management. In other words, enterprise risk management can improve operational performance and increase company value, and companies that are exposed to high risk of uncertainty in the environment will prevent and control the adverse effects of risk and minimize the beneficial effects and reduce the fluctuation of profits.

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