Journal of Accounting and Management Vision

Journal of Accounting and Management Vision

Relationship between earnings management and financial crisis with emphasis on management ability

Document Type : Original Article

Authors
1 Master of Accounting, Daneshvaran Institute of Higher Education, Tabriz, Iran.
2 ilkhichi
3 heris
Abstract
Financial resources are the most important need of companies to continue their activities. Some companies may face a financial crisis, in which case they will face financial shortages and continue their activities. The factors that can affect the financial crisis are profit management and managers' ability. The aim of the current research is to investigate the relationship between profit management and financial crisis with emphasis on management ability. This research is practical from the point of view of purpose, and from the point of view of correlation methodology, it is causal type (post-event). The statistical population of the research is all the companies admitted to the Tehran Stock Exchange, and using the systematic elimination sampling method, 134 companies were selected as the research sample in the 6-year period between 2013 and 2018. The method used to collect information is a library, and the relevant data for measuring the variables were collected from the Kodal website and the financial statements of the companies. Stata software was used to test research hypotheses. The results of the research show that there is a direct relationship between profit management and financial crisis. However, the effect of management ability on the financial crisis is reversed and significant. Also, management ability has an inverse and significant effect on the relationship between profit management and financial crisis. According to the results of this research, it can be concluded that in companies where profit management takes place, managers manipulate profits for their personal interests and cause the company to suffer financial crisis. But if the ability of managers is more in the company. Capable managers benefit from profit management in order to reduce the financial crisis, and with the increase in the capabilities of managers, the probability of the occurrence of a financial crisis decreases.
Keywords