Surplus Free Cash Flow and Earnings Management: The Moderating Role of Auditor Size

This Study seeks to scrutinize whether surplus free cash flow is correlated with earnings management, if auditor size moderates this relationship. To do so, modified Jones discretionary accrual model (۱۹۹۵) and audit firm size are used as audit quality indicator to measure earnings management. The research hypotheses are built upon a sample of ۱۰۳ companies listed on the Tehran Stock Exchange during the years ۲۰۱۳ to ۲۰۱۷ and then tested using multiple regression model based on panel data techniques. The results reveal that earnings management is significantly associated with surplus free cash flow. Furthermore, the findings confirm that auditor size exerts no significant impact on the relationship between surplus free cash flow and corporate earnings management.

Keywords:

Surplus Free Cash Flow , Earnings Management , Auditor Size