The role of discretionary accruals in earnings management: Evidence from Tehran Stock Exchange

Earnings management via discretionary accruals is a manager's instrument for changing stock holders’ expectations. The purpose of this study is to investigate the role of discretionary accruals in the earnings management of Iranian firms. There are two hypotheses associated with this study on the relationship between income smoothness and discretionary accruals and the proposed study is implemented on selected firms from Tehran Stock Exchange. The result of the first hypothesis indicates the relationship between earnings smoothness and discretionary accruals variables. It means that discretionary accruals (DA) leads to the converse relationship among discretionary accruals variation and current and future cash flow. The result of the second hypothesis indicates that the firms with high variation in Iran utilize more discretionary accruals compared with the firms with lower variation

The Relationship between Auditor Tenure Period and Discretionary Accruals in Listed firms on Tehran Stock Exchange

This study investigates the relationship between auditor tenure and discretionary accrual in listed firms on Tehran Stock Exchange. To examine discretionary accrual, Modified Jones model is used. Therefore, based on considered conditions 260 firm-year over 2006-2010 have been selected. Panel analysis is used for analyzing data. Results show that there is a positive significant relationship between auditor tenure and discretionary accruals in all the companies under study