Board of Directors’ Financial literacy and Real Earnings Management

Document Type : Research Paper

Authors

1 Assistant Proffessor of Accounting, University of Bojnord, Bojnord, Iran

2 MSc. of Accounting, University of Bojnord, Bojnord, Iran

Abstract

The aim of this study is to investigate the impact of board of directors’ financial literacy on real earnings management. The sample consists of 150 firms listed in Tehran Stock Exchange during a period from 2010 to 2016. Data is analyzed using panel data method and Eviews. This research uses real earnings management criteria including abnormal operational cash flows, abnormal discretionary costs and abnormal production costs. The financial literacy of the board members are measured using the educational degree. The results show that there is a positive and significant relation between financial literacy of the board members and the abnormal production costs as well as the abnormal discretionary costs. However, there is a negative and significant relation between the abnormal cash flows and financial literacy of the board members.

Keywords

Main Subjects

References

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Empirical Research in Accounting
Volume 9, Issue 3 - Serial Number 33
December 2019
Pages 171-197

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History

  • Receive Date: 12 February 2018
  • Revise Date: 16 December 2018
  • Accept Date: 18 December 2018

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