An investigation on the relationship between Intentional smoothing and companis' bankruptcy in Tehran Stock Exchange

Subject Areas : Management Accounting

Zohreh  Hajiha ¹ ((نویسنده مسئول و طرف مکاتبه)
Omid  Siri ² (ندارد)

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

Keywords: Real smoothing, Artificial smoothing, Bankruptcy, Income levels,

Abstract :

Income smoothing phenomenon is a common subject in accounting and finance and company bankruptcy is a field of finance that recent bankruptcy of international companies have been caused that this phenomenon is related wrong decisions of top managers and has involved many stakeholders. These reasons are caused that bankruptcy became important subject in recent studies. Hence, this research attempts to find potation relationship between two fields to understand if bankruptcy could case income manipulation? The research population is consists of two groups of 96 bankrupt companies and non bankrupt companies from accepted companies in Tehran Stock Exchange. The sample includes 81 bankrupt companies and 81 non bankrupt companies from the same industries and groups with industries and groups of bankrupt companies. So we selected finally 81 companies from each group.         The research hypotheses which each one has 6 sub hypotheses for different levels of income. We tested them via Panel Data model by Eviews 6. Artificial smoothing was calculated by Icle model for both groups of companies. Finally, hypotheses testing confirmed the relationship between bankruptcy and Real and Artificial smoothing in three levels of gross income, net income and operating income. So, it is expected that like other countries in Iran, managers of public companies to remain themselves in the market apply smoothing. The results could emphasize the relationship between accounting and finance fields