5 – Studying the Effect of Conservatism on Accrual-Based Profits Management and Chemical Products and Materials Industry in Tehran Stock Exchange

Somayeh Karim Baghban*1, Shohreh Yazdani2, Minoo Mansour Zare3 - 7592

International Journal of Scientific Management and Development, January 2016, Vol. 4, No. 1, pp: 27-32

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Managers manage the profit often in order to mislead shareholders about the actual economic performance of the company. So it is not surprising that various stakeholders of the company consider the company profits management inappropriate and try to reduce the authorities and powers of the managers through intensified monitoring. In this regard, the shareholders consider conservatism and corporate governance as a supervisory tool that limits the profits management. This research studies the probability of the effect of conservatism on accrual-based profits management and chemical products and materials industry and to assess the accrual-based profit management and conservatism the Jones modified model was used. The research period was from years 2008 until 2013.  The study method is descriptive and correlational, and by using regression model, Eviews7 software and generalized squares method the research hypotheses were examined. The results indicate that by increasing the level of conservatism, the opportunities of profit management are limited, and managers have no incentive to manage accrual-based profits that keeps the reported earnings more accurate and protected from manipulation.

Keywords: conservatism, accrual-based profit management, manipulation of the actual activities.

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