Investigation of the Relation between Real Earnings Management and Accounting Earnings Management in the Tehran Stock Exchange: Income Smoothing Perspective

The purpose of this paper is to investigate a relation between real earnings management and accounting earnings management to smooth earnings and to survey this fact when managers smooth earnings by real activities manipulation and when by discretionary accruals manipulation. On this paper is focus on discretional cash flow from operations as proxy variable of real earnings management and discretional accruals as proxy variable of accounting earnings management. Our statistical population is the firms listed in Tehran Stock Exchange that examined for the time period 1381 to 1386 by 98 firms as the sample. As a result, we find evidences that show that managers use both real earning management and accounting earnings management to smooth earnings and relation between real and accounting earnings management is Simultaneous and managers use complementarily the two earnings management to smooth income.