Abstract

With the increase in the comparability of accounting information, managers face with more risks in implementing earnings management due to the possibility of exploring accrual-based earnings management by auditors and legal entities. Therefore, this method is expected to be used less, and instead accruals manipulation is replaced with real earnings management methods. Given the above argument, therefore, the current research aims to study the effect of comparability of financial statements on real-and accrual-based earnings management. The research hypotheses were developed and tested using a sample of 85 companies listed in Tehran Stock Exchange during the years 2012-2016 and Multivariate Regression Model based on panel data. The findings reveals that the comparability of accounting information reduces accrual-based earnings management, while increases real earnings management. In other words, with the increase in the comparability of financial statement, managers substitute real earnings management for accruals manipulation. In other words, with the increase in the comparability of financial statement, managers substitute real earnings management for accruals manipulation.