Relationship Real Activities Manipulation with Accrual-Based Earnings Management Using Recursive Equation System Approach

Today, information is a key role in economic decision-making and no doubt the quality of such information is based on accuracy in the preparation of it. Among the profit of one of the most important information that will be announced by the companies. The present study was to investigate the relationship between Real Activities Manipulation with Accrual-Based Earnings Management using Recursive Equation Systems approach in the Tehran Stock Exchange (TSE). Accordingly, a sample 79 companies selected for the 6-year period 2009 to 2014 (474 firm-year observations). It should be noted that information was collected in 2008 and 2015 to collect some research data. The results are expressing the inverse relationship between real activities manipulation with accrual-base earnings management. This means that managers increase (decrease) the extent of accrual-based earnings management when real activities manipulation turns out to be unexpectedly low (high). The result of this study is consistent with research by Zhang (2012) and Jie and et.al (2017).