Earnings management, business strategy and bankruptcy risk
Subject Areas : Journal of Capital Market Analysis
Mahdi Filsaraei
1
,
Mohammadreza shoorvarzi
2
,
Mahdi Zanganeh
3
1 - Assistant Professor,Department of Accounting,Hakim Toos Higher Education Institute Mashhad,Iran
2 - Associate Professor,Department of Accounting, Islamic Azad University. neyshabour,Iran
3 - Master Graduated of Accounting, Hakim Toos Higher Education Institute,Mashhad,Iran
Keywords: Earnings Management, Cost Leadership Strategy, Product differentiation strategy, Business Strategy, bankruptcy risk,
Abstract :
Competitiveness in the financial markets puts many companies at risk of bankruptcy and out of competition. This can cause concern for investors. Bankruptcy risk is mentioned as an important fact in the life cycle of modern business units that can lead to heavy economic and social costs to shareholders, creditors, managers, employees and the economy as a whole. The key here is to identify the factors that can be used to predict the risk of bankruptcy in the near future. This research will be conducted with the question of whether accrued earnings management and the type of business strategy of the company can help shareholders and managers in predicting the risk of bankruptcy of the company? The main purpose of this study is to investigate the effect of business strategy on earnings management and bankruptcy risk in companies listed on the Tehran Stock Exchange. The statistical population of the present study, after applying some of the limitations in this study, consists of 140 companies listed on the Tehran Stock Exchange during the years 2914 to 2020. Multiple linear regression model has been used to test the research hypotheses. The results of the study indicate that earnings management has a positive and significant effect on bankruptcy risk. The results also showed that cost leadership strategy has a significant negative effect on bankruptcy risk. In addition, the results showed that the product differentiation strategy has a significant negative effect on bankruptcy risk.
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