Investigating the Relationship between Earnings Management and the Stock price bubble of the Firms Accepted in Tehran Stock Exchange

محورهای موضوعی : Financial Accounting

Hassan Zalaghi ¹ (Department of Accounting, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran)
Masoume Ghasemi ² (Department of Accounting, Alvand Non-Profit Higher Education Institute, Hamedan, Iran)
Reza Madadian Moez ³ (Department of Accounting, Faculty of Economic and Social Sciences, Bu-Ali Sina University, Hamedan, Iran)

تاریخ دریافت : 1400/03/17 تاریخ پذیرش : 1400/08/20 تاریخ انتشار : 1401/04/10

کلید واژه: Earnings Management, Capital Market, Stock price bubble,

چکیده مقاله :

Capital market is considered one of the most important channels in appropriating the financial resources optimally, and any disruption occurs in it will encounter the appropriation of financial resources in the economics of each country with a serious problem. The economic bubble is one of the reasons disrupting capital appropriation. Generally, when there is a difference between the price of a share and its expected price in the future, the economic bubble issue is considered. The economic bubble will face investors by choosing the best investment opportunities. It will finally deviate the process of equipping and appropriating the resources optimally from its principled path. The present study aims at investigating the relationship between earnings management and economic bubble. To achieve this purpose, the number of 109 companies has been studied from 2008 to 2018. The study's hypothesis was tested through a multivariate regression method and panel data method and utilizing Eviews9. The findings show a significant relationship between earnings management and economic bubble, which shows that besides the external factors, the managers' behavior may influence the generation of the economic bubble.

منابع و مأخذ:

[1] Abbasi, Gh., Mohammadi, H., Neshatavar, M., Investigating the role of price bubble in creating fluctuations in Tehran Stock Exchange, Financial Economics Quarterly, 2018, 12(43), P.152-133, (in Persian).

[2] Abbasian, E., Mahmoudi, V., Farzanegan, E., Identifying the price bubble of ordinary shares of Tehran Stock Exchange using the present value model, Journal of Accounting and Auditing Reviews, 2011, 17(60), P.92-75, (in Persian).

[3] Asadi, Gh., Hamidizadeh, M., Soltani, A., Investigating Stock Price Bubbles in Tehran Stock Exchange by Company Size and Industry Type, Quarterly Journal of Accounting Studies, 2006, 4(14), P. 40-71, (in Persian).

[4] Ali, S., Yazdi, H., Impact of Speculative Bubble on Stock Returns in Companies Listed on Tehran Stock Exchange. Advances in Mathematical Finance and Applications, 2018, 3(4), 115-127), (in Persian). Doi: 10.22034/amfa.2019.553492.1089.

[5] Bayat, M., Afshari, Z., Monetary Policy and Asset Price Bubbles with Emphasis on Stock Price Fluctuations, Economic Journal, 2016, 16 (12), P. 100-183, (in Persian).

[6] Bisogno, M., and De Luca, R., Financial distress and earnings manipulation, Evidence from Italian SMEs. Accounting and business research, 2015, 44(6), P. 119-129.

[7] Blot, C., Hubert, P., Labondance, F., Monetary Policy and Asset Price Bubbles, paper work, University de Paris Nanterre – EconomiX, 2018.

[8] Chen, C., Jeong-Bon., Kim, LiYao., Earnings smoothing: Does it exacerbate or constrain stock price crash risk, Journal of Corporate Finance, 2017, 42, P. 36-54. 

[9] Gholizadeh, M., Ramezanpour, I., Farkhondeh, M., Investigating the causal relationship between earnings per share and future returns due to the existence of intrinsic rational bubble in firms listed on the Tehran Stock Exchange, Quarterly Journal of Experimental Financial Accounting Studies, 2015, 13 (50), P. 184-157(in Persian). Doi:10.22054/qjma.2016.7062.

[10] Huddart S., Louis, H., Manageriyal stock sales and earnings management during the 1990s stock market bubble, The Pensylvania State Uinversity, 2005, Working paper, [e-mail].

[11] kashanitabar,S., Fallahshams,M., Chirani,E., Zomorodian,G., Prediction of stock price bubble drop in Tehran Stock Exchange (conditional Volatility approach), Journal of Investment Knowledge, 2021, 6(36) P.,415-433,(in Persian).

[12] Keyghobadi, H. A. Ghadiri Moghadam, M. Jalali Majidi. Evaluating the Elements Causing and Affecting Economic Bubble in Tehran Stock Exchange Using Logit and ANN Models, MAGNT Research Report, 2014, 2(7), P. 79-87, (in Persian).

[13] Kothari, S. P., Leone, A. J., & Wasley, C. E., Performance matched discretionary accrual measures, Journal of accounting and economics, 2005, 39(1), P.163-197.

[14] Mehrani, S., Moradi, M., Iskander, H., The Relationship between Institutional Ownership Type and Conservative Accounting, Financial Accounting Research, 2011, 6 (3), P. 47-72, (in Persian).

[15] Narayan, P. K., S. Mishra, S. Sharma & R. Liu, Determinants of stock price bubbles, Economic Modelling, 2013, 35(8), P.661-667.

[16] Ogonna, N., Liquidity shocks and stock bubbles., Int. Fin. Markets, Inst. and Money 2015, 35(9), P. 132–146.

[17] Salemi, S., and Jamshidi Navid, B., Study of the effect of operating profit smoothing on the formation of the price bubble, Third International Conference on Management and Accounting Techniques, Razi Conference Hall, November 20, 2017, (in Persian).

[18] Samadi, A, Javid, D., S, F., Abbasloo, M., Investigating the bubble of stock prices of 50 active firms of Tehran Stock Exchange, Financial Accounting Quarterly, 2011, 2(7), P. 97-113, (in Persian).

[19] Sarebanha, M., Amiri, I., Molainejad, M., Investigating the effect of earnings smoothing on the formation of price bubbles in Tehran Stock Exchange, Journal of Accounting and Auditing Reviews, 2010, 16(59), P. 23-41, (in Persian).

[20] Siegel, J. J., What is an asset price bubble? An operational definition. European financial management, 2003, 9(1), P. 11-24.

[21] Soheili, S, Ahmadi, B., Investigating the Price Bubble of Firms Listed on the Tehran Stock Exchange, Considering the Smoothing of Profits and Growth Opportunities of Firms, The Second International Conference on New Research in Management, Economics and Accounting, Kuala Lumpur-Malaysia, 2015, (in Persian).

[22] setayesh, M., taghizadeh, R., jokar, M. Investigation the effect of accrual based Earnings Management and real Earnings Management on Stock Price Crash Risk of the listed companies in the Tehran Stock Exchange, Financial Accounting Knowledge, (2017), 4(1), 44-23, (in Persian).

[23] Vakilifard, H, Talebnia, G., Kiani, M., Investigating relationship of Free Float creating price bubbles in firms listed in the Tehran Stock Exchange, financial engineering and management of securities, 2011, 8(4), P. 75-66, (in Persian).

[24] White, E. N. Booms and busts: The 1990s in the mirror of the 1920s. Finance Research Unit, Institute of Economics, University of Copenhagen 2004. (No. 2004/09). Working Paper.

[25] Zandieh, M., Ghouchani, R., The effect of trading volume and high P / E ratio on creating a price bubble in Tehran Stock Exchange, Investment Knowledge Quarterly, 2013, 1(8), P.21-24, (in Persian).