The Effect of Profit Management on Capital Cost of Companies Listed in Tehran Stock Exchange (Case Study: Pharmaceutical, Petrochemical and Automotive Industries)

Farzaneh Laraki

Abstract


Reported earnings and earnings management are among analysts' critical financial information and variables as prominent factors in reviews and judgments. The present study has investigated the effect of earnings management on the cost of capital of companies listed on the Tehran Stock Exchange on a case-by-case basis in the pharmaceutical, petrochemical, and automotive industries from 2010 to 2016. Two optional accruals were used to measure earnings management using Jones' modified model and real earnings management. In this study, the required data were collected using library studies and modern Rahavard software. Also, multivariate regression was used to test the hypotheses, and their significance was determined using t and F statistics. The results indicate that in the three industries of pharmacy, petrochemical, and automotive, the criteria for measuring earnings management, i.e., optional accruals and real earnings management, do not affect its capital cost.

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References


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