Impact of Accrual-based Earnings Management on Investment Efficiency of the Companies Listed in Tehran Stock Exchange

Document Type : Research Paper

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Abstract

This study investigates whether and how firm investment efficiency is influenced by the accrual-based earnings management. The major purpose of this paper is investigating and analyzing the relationship between proxy of accrual-based earnings management and firm’s excess investments. Prior researches suggest that earnings management leads to increase in excess investments of firms (over-investments or under-investments). In this study, the data from 63 listed companies in the Tehran Stock Exchange in the period of 1378-1388 (1999-2009) was collected.
The results indicated that there is a significant relationship between discretionary accruals (as proxy of accrual-based earnings management) and excess investment. This suggests that firm’s investment behavior is influenced by accrual-based earnings management. The results also indicate that there is a significant relationship between discretionary accruals (as independent variable) and firm’s excess investment in the period afterwards

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Journal of Accounting Knowledge
Volume 5, Issue 17 - Serial Number 17
September 2014
Pages 29-48

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History

  • Receive Date: 13 January 2014
  • Revise Date: 22 June 2014
  • Accept Date: 08 July 2014

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