مشخصات پژوهش

Relying on prior studies (e.g. Roychowdhury, 2006) to develop our proxies for real earnings management, we analyze cash flow from operations (CFO), production costs and discretionary expenses to detect evidences on real activities manipulation to meet zero earnings target in Tehran Stock Exchange (TSE) over 2002-2009. Also, we examine the asymmetric timeliness of reported (or managed) earnings and unmanaged earnings (earnings before exertion of real activities manipulation) in the firms engaging in real earnings management (suspect firms) and the other firms. We detect abnormally low CFO, abnormally low discretionary expenses and abnormally high production costs for companies that report small positive net incomes at the annual level. The evidence is consistent with firms trying to increase reported annual earnings beyond zero by giving price discounts to boost sales temporarily and by overproduction and decrease in discretionary expenses. Finally, we find that the asymmetric timeliness of reported earnings in suspect firms is significantly lower than of other firms but there is no significant difference between the asymmetric timeliness of unmanaged earnings in suspect firms and others.