A study on relationship between earnings management and operating cash flows management: Evidence from Tehran Stock Exchange

Abstract

This study investigates the impact of earnings management on operating cash flows management over the period 2004-2011 using the information of 119 firms listed on the Tehran Stock Exchange. Results indicate that there is a meaningful relationship between earnings management and operating cash flows management. In other words, earnings management creates and shapes operating cash flows management. In addition, after controlling for the loss reporting, firm size and firm's financial risk, the results show that there was a relationship between loss reporting and firm size with the cash flows management. When firms report loss, then operating cash flows increases. Finally, operating cash flows decreases when firm size increases. However, our survey does not provide any evidence to believe there is any relationship between financial risk and cash flows management

The Moderating Role of Earnings Management on the Relationship between Cash Flow Activities and Stock Returns in the Jordanian Manufacturing Firms

“…Moreover, Collins, Hribar and Tian (2014) indicated a significant association between the operating cash flow activities and the firms' stock returns. The same idea has been expressed by many other previous researchers (Kroes and Manikas, 2014;Banimahd and Aliabadi, 2013).…”

Determinants of earnings management: The study of Nigerian nonfinancial companies

“…B. Banimahd andM. J. Aliabadi (2013, 1681) examined the impact of earnings management on the management of cashflows from operating activities over the period from 2004 to 2011 for the firms listed on the Tehran Stock Exchange and found a significant relationship between them.…”

Exploring the relation between corporate reporting and corporate governance effectiveness

“…where, for fiscal year t and firm i, TA represents the total accruals defined as the difference between earnings and operating cash flows, A it À 1 represents total assets in t-1, DREV it is the change in revenues from the preceding year (REV t -REV t-1 ), DREC it is the change in net accounts receivables from the preceding year (REV t -REV t-1 ), and PPE stands for the gross value of property, plant and equipment, ROA it represents the return on assets of firm i in year t, BM it denotes the book-to-market ratio of firm i in year t. 4.1.2.5 Earning timeliness. T PERIOD: measured by the number of days between the end of the year and publishing of the financial statements (Banimahd and Aliabadi 2013;Oladipupo and Okafor 2013).…”

“…Corporate governance effectiveness ¼ f ðvoluntary disclosure; earnings management; accounting conservatism; earnings timeliness; Z 1 ; « 1 Þ (1) Khan and Watts (2009); ET: Earnings timeliness: T PERIOD: measured by the number of days between the end of the year and publishing of the financial statements (Banimahd and Aliabadi, 2013;Oladipupo and Okafor 2013); LEV: Total liabilities to total assets; MB: Ratio market-book: market value/book value; FSIEZ: Log of firm's total assets, where the Z i am vectors of control variables[2] and instruments influencing the dependent variables and the « i are the error terms.…”