Full Length Research Paper
Abstract
The accuracy of predicting future operating cash flows and the stability of accounting profit were the indices applied in defining the quality of financial reporting. The hypotheses of the study were tested through the panel data gathered from 70 listed companies in Tehran Stock Exchange. The findings of the research indicated that earnings management through accruals decreased the quality of financial reporting, that is, the purpose of performing earnings management was to misstate and distort financial reports and managers performed it to opportunistically benefit themselves since earnings management decreased the accuracy of predicting future operating cash flows. However, earnings management had no effect on the persistence of accounting profit.
Keywords: Earnings management, opportunistic earnings management, Kaznic model, adjusted Barth model, and predicting persistence of accounting profit model.
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