Study of the Effect of Management Ability on Earnings Quality

This research investigates the relationship between management ability and earnings quality in the listed companies on Tehran Stock Exchange. Management ability is defined as the ability of managers in concentrating their ability to enhance the efficiency of a company’s resources. The research data, using the statistical population, includes 94 companies listed on Tehran Stock Exchange. These companies were analyzed in 8 different industries during the period of 2008 to 2013 by using pooled data and ordinary least squares regression. The research includes three hypotheses in which the relationship between management ability, as an independent variable, and three dependent variables, i.e. earnings restatement, earnings persistence, and accruals quality (earnings quality measures), is studied. The results indicate the confirmation of the hypotheses and that there is a positive significant relationship between management ability and earnings quality.

Keywords:

Management ability , earnings quality , earnings restatement , accruals quality , earnings persistence