The effect of corporate governance bylaw of Tehran Stock Exchange on earnings management

Subject Areas : Management Accounting

زهرا پورزمانی ¹ (ندارد)
محمدرضا اولی ² (ندارد)
جواد عبدالهیان ³ (ندارد)

Received: 2012-05-26 Accepted : 2012-11-21 Published : 2014-05-20

Keywords: Corporate governance bylaws, Corporate Governance, earnings management, board independency, the separation between the rol, stock ownership&#x0D, &#x0D, of no-duty d,

Abstract :

AbstractIn late 1386, Tehran Stock Exchange adopted new regulations regard to corporategovernance called corporate governance bylaws. Subject of this study is to review the effectof implementation of these regulations on earnings management on listed companies ofTehran Stock Exchange. To do this, required information of 133 listed companies, by usingcross-sectional analysis, for fiscal years 1385 and 1388 was collected. The relationshipbetween earnings management and corporate governance mechanisms stated in the bylawswere analyzed by using multivariate regression model. The results show that following theadoption of corporate governance regulations, board independence has improved, sinceimproving the level of board independency is associated with lower levels of earningsmanagement. This study also provides evidence that the separation between the role of CEO,and Chairman, as well as stock ownership of inside directors have no significant relationshipwith earnings management. According to the survey results to increase the effectivenessof the regulations as a regulatory tool in the capital market, it is proposed that the Regulationsof the company become a law in Iran to benefit from stronger performance guarantees.