The impact of product market competition on earnings quality in Agriculture and food industry companies Tehran Stock Exchange

The purpose of this article is the effect of product market competition on earnings quality in Agriculture and food industries in Tehran Stock Exchange. For this purpose, the Adjusted Lerner Index is used as a benchmark for competition in product market. For calculaltion of the quality of earnings three aspects were considered, the quality of accruals, the ratio of operating cash flow to operating profit and changes in accruals. The population of this research was 36 agricultural and food companies in Tehran Stock Exchange. For testing of hypotheses, the data was gathered for the years of 2007 to 2016 and Multivariate linear regression analysis was used. The results of hypothesis test shows that with increasing product market competition reduced discretionary accruals and increae the earnings quality. Also result show that there is no significant relationship between product market competition and ratio of operating cash to operating profit. The other results show that there is no relation between product market competition and changes in accruals. Based on obtained results it is recommended to investors and creditors that they must consider the relation between competition in the product market and earnings quality.