Modeling the contagion of parallel market uncertainties on real and accrual profit management in short, medium and long term periods.

Subject Areas : Journal of Capital Market Analysis

Adel Gardoon ¹ , Nader Khedri ² , ali mahmoodi ³ , Mehdi Basirat ⁴

1 - Ahvaz Azad University - Faculty of Humanities accounting group
2 - Assistant Professor, Department of Accounting, Abadan Branch, Islamic Azad University, Abadan, Iran
3 - Assistant Professor, Department of Accounting, Ahwaz Branch, Islamic Azad University, Ahwaz, Iran
4 - Department Economics, AhvazBranch, Islamic Azad University, Ahvaz, Iran

Received: 2024-06-23 Accepted : 2024-09-06 Published : 2024-12-19

Keywords: uncertainty, spillover, real profit management, accrual profit management, parallel markets,

Abstract :

Financial statements are the main decision-making bases of capital market actors, which are influenced by internal and external factors. Uncertainty in other markets is one of the most important factors affecting the financial statements of companies. The current research was conducted with the aim of modeling the spillover of uncertainties of parallel markets on the types of profit management in a practical way, the statistical sample includes 171 stock exchange companies in the period of 2011 to 2021 in a period of 11 years with seasonal data. We used the VAR-MGARCH model to investigate the purpose of the research. According to the results, the probability of accrual profit management is increasing over time, and real profit management is decreasing. This means the substitution between accrual and actual interest over time. Also, uncertainties in real markets compared to parallel markets in a longer period of time affect the management of real and accrual profit; In addition, the investigated uncertainties have a stronger effect on the management of guaranteed profits than the management of real profits. The fluctuation in parallel markets has the ability to influence the level of profit management of companies, and the substitution relationship between the management of promised and real profits can be seen.

References:

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