The Investigation of Relationship between Earnings Management and Corporate Financial Failure in Tehran Stock Exchange

Subject Areas : Financial Knowledge of Securities Analysis

زهرا پورزمانی ¹ (مسئول مکاتبات)
مهدی پویان راد ² (ندارد)

Received: 2011-04-23 Accepted : 2011-12-01 Published : 2013-03-10

Keywords: accounts manipulations, earnings management, Income Smoothing, financial&#x0D, &#x0D, failure, Bankruptcy,

Abstract :

Due to importance of financial status of corporate and accounts manipulations, wedecided to investigate the relationship between corporate financial failure (bankruptcy)and earnings management that are amongst the main issues in companies grouping andaccounts manipulations, respectively.Therefore, income smoothing as a part of earnings management was partitioned andrelation each part of it separately was studied on three levels (net income, operationincome and gross profit) to companies status. For this study, data was collected for 33bankrupt companies (subject to article 141 of commerce law) and 33 non-bankruptcompanies active in Tehran exchange in 1380-1387.The research hypothesizes have been tested using the chi-square, t-test and logisticregression.Hypotheses test results showed that there is a direct and fairly strong correlationbetween research variables in real income smoothing, and for artificial income smoothingno meaningful relation between research variables was noted.