The Relationship Between Earnings Management and Future Profitability

Subject Areas :

Bahman Banimahd ¹ , Hamed Kazemi Mohsen Abadi ²

1 - استادیار دانشگاه آزاد اسلامی واحد کرج
2 - کارشناس ارشد حسابداری دانشگاه آزاد اسلامی واحد تهران مرکزی

Received: 2015-05-09 Accepted : 2015-05-09 Published : 2012-11-21

Keywords: Earnings Management, Future Profitability, Size, Leverage,

Abstract :

This paper investigate relationship between earnings management and future profitability in listed companies in Tehran stock exchange during 2001 to 2007. Research method in this study is correlation .The results indicate that the earnings management is positively related to the future firm profitability. There is a negative relation between future profitability and firm size and financial leverage in study sample. Our findings contribute to the literature on earnings management that form of the earnings management is income smoothing in Iran. This findings could be helped to user of the financial statements for analyzing of financial statement in a better manner. Meanwhile, research results confirm efficient perspective of the positive accounting theory on earnings management.

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