Abstract:
Due to the importance of net profit figure, a lot of research has been done on earnings and related issues. Profit is an important criterion for investors in business units that in this regard can be manipulated by business unit managers. Conservatism is also a tool of corporate governance for shareholders that reduces and limits earnings management. On the other hand, the auditor can reduce the conflict of interest between managers and shareholders. In this way, regular and continuous auditing of companies reduces the possibility of manipulating financial information. The purpose of this study is to investigate the relationship between real earning management and unconditional accounting conservatism. For earning management, an abnormal cash flow measure is used, which is based on the Roychowdhury (2006) model. The statistical population of the research includes companies listed on the Tehran Stock Exchange during the years 1397-1390, which according to the set limitations of the research sample includes1018 years-companies. Findings show that there is a positive and significant relationship between unconditional conservatism of accounting and real earning management from cash flows and audi risk has a negative effect on the relationship of earnings management and unconditional conservatism.Keywords: Real Earning Management, Abnormal Cash Flow, Unconditional Conservatism
Machine summary:
The research findings show that there is a positive and significant relationship between unconditional accounting conservatism and real earnings management resulting from cash flows, and with the inclusion of audit risk, unconditional conservatism has a negative effect on earnings management.
46 Modern Research in Accounting and Auditing, Second Period, Third and Fourth Issues Figure No. 2: Descriptive statistics of research variables Return on assets 0/114 4/271 1/212 0/127 0 0/705 0/144 1018 ROA Financial leverage 0/608 3/284 -0/038 0/185 0/092 1/365 0/595 1018 LEVERAGE Unconditional conservatism 0/075 16/955 3/050 0/105 0 0/944 0/103 1018 CONSER_NOA Firm age 2/833 7/637 -1/689 0/634 0 3/931 2/734 1018 FIRM_AGE Firm size 14/102 3/971 0/654 1/473 10/166 19/249 14/275 1018 SIZE Real earnings management from -0/018 6/682 0/914 0/164 -0/663 0/932 0 1018 REM_CFO cash flows (research findings) Figure No. 3: Descriptive statistics of audit risk Type of auditor's opinion in specific risk code Percentage composition Row Number of data points Previous year Audit Data provider 1 Unqualified report - risk-free 1 565 55/50% 2 Qualified report - 1 paragraph 2 149 14/64% 3 Qualified report - 2 paragraphs 3 121 11/89% 4 Qualified report - 3 paragraphs 4 71 6/97% 5 Qualified report - 4 paragraphs and more 5 106 10/41% 6 Disclaimer of opinion 6 6 0/59% (research findings) Hypothesis testing results Correlation coefficient is used when they want to measure the linear relationship of one variable with another variable.
Test results and examination of the second research hypothesis Hypothesis 2: High audit risk has a negative effect on the relationship between unconditional accounting conservatism and real earnings management.
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