Comparative Evaluation of Earnings Management and the Cost of Capital in Tehran Stock Exchange (Case Study: The Pharmaceutical Industry, Petrochemical and Cement)

Abstract

Nowadays, earnings management has become one of the most widely used and influential phenomena and issues in the financial accounting circles. Several scholars, extensive research and diversity in this regard and have achieved an important result. Considering the importance of taking into account discretionary accruals and earnings management, we actually try to have a stake in this section of the paper. The research to explain about earnings management and capital costs and the relationship of these two firms listed in the Tehran Stock Exchange (Case study: the pharmaceutical industry, petrochemical and cement). Specifically, we aim to identify the characteristics of firms that knowingly manipulated to act in profit, profit management. The sample included 95 companies listed on the Tehran Stock Exchange (Consisting of 46 companies in pharmaceuticals, petrochemicals and cement), for a period of 5 years from 1389 to 1393. The findings showed regardless of the selected sample of target industries and all companies (95 companies) and direct correlation between earnings management and capital cost there. On the other hand complementary studies showing significant difference was observed between different industries.