The Relationship between Earning Management and Capital Structure

This paper analyzes the relationship between capital structure and earning management. For analysing we used ۱۱۹ non-financial companies that listed in Tehran Stock Exchange from ۲۰۰۰ to ۲۰۰۸. The researchers will focus on comparing the Jones Model and the Modified Jones Model, which are the two most frequently used model in empirical analysis nowadays. Earnings management is a kind of management which uses accounting techniques to meet the executives. Researchers in this area found many approaches to detect the earnings management; within these approaches are the discretionary accrual models which include the modified. Our findings suggested a positive relationship between debt ratio and discretionary accruals is (۰.۰۰۰). Also there is a negative association between return on assets (ROA) and debt ratio. Finally return on equity and total assets related positively with debt ratio.  

Keywords:

earning management , Capital Structure , debt ratio , return on assets , return on equity , total assets