Investigation of the relationship between earning management and earning response coefficient based on accounting variables

Document Type : Original Article

Authors
Mohammad Ebrahim Pourzarandi 1
Mohammad Hassani 2
Zabihollah Taheri 3
1 Associate Professor of IAU, Central TehranBranch
2 Assistant Professor of IAU, Nourth Tehran Branch
3 Master Student in Accounting of IAU, Nourth Tehran Branch
Abstract
The different responses of investors about earning information cause different response will to market. The original purpose of this research is investigation the relationship between earnings management and earnings response coefficient. Financial analyzers believe that earnings management measure based on discretionary accruals. In this research, the Jon's modified model is used for measurement of earnings management and Ohlson's valuation model is used for measurement of earnings response coefficient. Statistics population research inclusive listed companies in Tehran Stock Exchange and sample statistics includes 154 companies over the period 2007-2012. By using the panel regression analysis, several models have estimated and hypothesis has examined. Results show that there is negative and significant relationship between earnings management and earnings response coefficient. Also earnings response coefficient in companies that manage the earnings is more than companies that do not manage the earnings.
Keywords
earnings management
Earnings Response Coefficient
accruals
Earnings per Share