6) The Relation of Business Strategy with Earnings Quality and Stock Return in Firms listed in TSE

This study is aimed to examine the relation of business strategy with earnings quality and stock return in firms listed in Tehran Stock Exchange during the period from 2005 to 2012. The sample includes 99 firms and  the study is a descriptive correlation one.  To test the hypothesis, the panel data model and ordinary least squares (OLS) method are applied. In this study, from the business strategy point of view, firms are classified into two groups of prospective and defensive ones. To determine a firm's strategy, Ittner et al (1997) composite scoring system has been used. Also, to measure earnings quality variable, two indices of accounting conservatism and earnings management are employed. To measure accounting conservatism, the Givoly and Hayn (2000) conservatism index and to measure earnings management, the scale of the total discretionary accruals (according to adjusted Jones model) have been used. The results indicate that the level of earnings management in defensive corporations is higher than offensive (pioneer) corporations. Also, the results imply that the economic environment affects the relation between business strategies and earnings quality of a firm. Moreover, the results show no significant relation of firms' strategy with their level of conservatism and stock returns. Furthermore, it was found that the economic environment has no influence on the relation between business strategies and stock return of firms