Daniyal Ahmadyar - Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran Master of Accounting
Sina Kheradyar - Assistant Professor of Accounting, Corresponding Author Department of Accounting, Rasht Branch, Islamic Azad University, Rasht, Iran

In corporate governance, the relationship between free cash flow and earning management, which to reduce agency problems and information asymmetrybetween shareholders and managers by ownership structure is more contentious. Therefore, the aim of the present study is to explore the effect of ownershipstructure, which includes institutional and managerial ownership, on the relationship between free cash flow and earnings management in companies listedon Tehran Stock Exchange. The sample includes 115 companies in the period of 2007 to 2012. The panel data method applies for testing the hypotheses. The resultshow that firstly, there is a significant and negative relationship between the free cash flow and earnings management, and secondly, the managerial ownershipincrease the negative relationship between free cash flow and earnings management, which the institutional ownership has no effect.

Ownership structure, free cash flow, institutional ownership, managerial ownership, earnings management, panel data method