The relationship between earning conservatism and earning management and with dispersion of profits in the Tehran Stock

Review of the literature explains this issue that the companies that manage earnings and have high conservatism, have lower earning quality and by applying conservatism methods, the quality of reported earning becomes lower. Concerning the importance of financial reporting quality and its impact on decision making of the users of financial statements, in this study, the relationship between earnings management and accounting conservatism with the dispersion of profits (as a measure of dispersion of profits) have been investigated. The sample consisted of 135 companies listed on the Tehran Stock Exchange during the period 2010-2014. In this study, to measure the earning management, Jones’ modified model and to measure conservatism, Guile and Shine’s model (2000) have been used. Using multivariable regression analysis, the results indicate that earnings management increases profit dispersion. Also the results suggest the negative impact of conservatism on the dispersion of profit; however, the results do not have there quired significance.

Keywords:

Earnings management , accounting conservatism , accruals , dispersion of profits.