Earning Management Effects On Nonlinear Relation between Disclosure and Financial Performance

This paper is aimed to investigate the nonlinear relation between disclosure and financial performance and effects of earning management on this relation. The sample consists firms listed in Tehran exchange, during the period from 2000 to 2016. This study uses panel GMM method and results show that there is an inverse U relation between discretionary disclosure and financial performance. In other words, increase of disclosure at threshold level may improve financial performance, but its increase more than threshold level decreases financial performance. Also, findings indicate that earning management significantly decreases the effects of disclosure on financial performance. Moreover, earning management and financial performance adjustments significantly decrease the effect of board independence on relation between disclosure and financial performan