Investigating the relationship between borrowing, unexpected real earnings management and future interest cost in companies listed on the Tehran Stock Exchange

Document Type : Original Article


Deylaman University, Lahijan, Iran


The net earnings of any business is always used by investors, creditors, accounting professionals, financial managers and stock market analysts. Companies based on their final financial information are aware of their high profitability, pay stock dividends. The real earnings management is done through changes in operating activities with the aim to mislead the stakeholders. Manipulation of actual activities affects cash flows and, in some cases, accruals. The main purpose of this study is to investigate the relationship between borrowing and the management of real unexpected earnings in companies listed on the Tehran Stock Exchange. To test the hypotheses, 154 companies which their audited financial statements were accessible during the years 2011 to the end of 2016 have been selected as the statistical sample. The results of this study show that there is a direct relationship between unexpected real earnings management and interest cost ratio. No relationship between borrowing and unexpected real earnings management has been found.


Main Subjects

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