Comparative Investigation of the Guily and Hice Model and Jones Adjusted Model for Testing

Subject Areas : Management Accounting

Saeed  Jabbarzadeh Kangarloiee ¹ (نویسنده مسئول و طرف مکاتبه)
Saeed  Khodayar Yeganeh ² (ندارد)

Received: 2009-09-01 Accepted : 2009-12-16 Published : 2009-10-23

Keywords: Conservatism, earnings management, Financial Reporting,

Abstract :

With respect to results of research done on the impact of conservatism in finanancial reporting on earnings management around the world, that was achieved conflicting results. in this study, we try to answer the following two questions. First, the level of conservatism in financial reporting used by companies in Tehran Stock Exchange, what do the trend show over time. And Second, whether the managers have the behavior of conservative in financial reporting, show trend to earnings management or non-conservative managers. To answer the above questions and test of research hypotheses, the sample of 97 member from listed companies of Tehran Stock Exchange in a 7-year period between 1380 to 1386 are selected. Then, after the measurement of conservatism through the Guily and Hine model and earnings management through adjusted Jones model, are examined research hypothesis. The results of applying the conservative trend in financial reporting, shows a very low level using the conservative and close to zero that indicates the non-use of conservatism in financial statements by corporate managers. The other hand and according to the above results, the main research hypothesis based on the conservative influence in financial reporting on the earnings management, is rejected.