Review of Change in Model of Earnings Management of Jones Modified And Compare it with The Model of Affective Variables on Accruals of Tehran Stock Exchange in Bankrupt Firms

Earnings management models are designed according to economical and environmental conditions of each country. The purpose of this research is to meanwhile, by adding the intercept to the Jones modified model, provided a model based on Tehran Stock Exchange data and tested it for bankrupt firms and compared with the Jones modified model. in order to achieve this purpose , we use cross sectional regression and software R to factor analyses all the variables affecting accruals. since it becomes clear which variables have the most impact on accruals. The method has been trial and error. The model of effective variables on accruals is originated from factor analysis. The model has been compared with two forms, A) With adding intercept B) Without intercept. Jones modified model with adding intercept showed us that 28 firms out of 37, had more earning management before bankruptcy, while the without intercept identified only 24 firms. And also the model of effective variables on accruals has been statistically more efficient then Jones modified model and it able to showed us that 34 firms out of 37, had more earning management before bankruptcy (With adding intercept), and the without intercept identified 32 firms.