The Effect of Audit Quality on Earnings Management &Conservatismof Listed Companies in Tehran Stock Exchange&Agency Cost

Separation of ownership from management, conflict of interests between managers and owners and management approaches resulted raising issues of earnings management, accounting conservatism and the agency costs in accounting . Based on the theory of corporate governance (laws and regulations that may interest favor of the interests of all parties are preserved), the owners and shareholders of companies with hiring auditors try to control those activities. This study sought to examine the association between audit quality and earnings management and conservatism. Sample Data of survey is 100 listed companies in Tehran Stock Exchange for the period 2006 to 2012 .The research panel is used to analyze the hypothesis. Test of results showed that by increasing the audit quality , earnings management is going to reduce (there is a negative relationship between audit quality and earnings management) and agency costs are going increases(there is a possitive relationship between audit quality and agency costs).