The Relationship between Audit Committee Characteristics and the Real and Accrual Earnings Management of Listed Companies in Tehran Stock Exchange

Company audit committee related to corporate governance is one of the areas of regulatory that has an important effect the company's business environment.The purpose of this study is to investigate the effectiveness of independent audit committees in constraining real and accrual earnings management. The research empirically examined the relationship between three audit committee characteristics - the composition (expertise and independence) and size of the audit committee - and the real and accrual earnings management. Accrual earnings management was measured by modified-Jones models and real earning management was measured by Roychowdhury models (2006). The sample of the research include corporations with audit committee between 1391 and 1393. It is found that independence of the audit committee is negatively associated with accrual earnings management but other characteristics are not related. Audit committee expertise is positively associated with real earnings management but independence and size of audit committee are not related to real earnings management.