Big Bath and Financial Inability

Big Bath Accounting is a behavior in which management intends to increase the capacity for the next period by increasing costs during an undesirable period, So that way, it achieves maximum desirability. This pattern happens when it happens hat the company suffers from financial inability and restructuring and losses and has not been achieved in the foreseeable future. The purpose of this study, is to analyze the application of the Big bath technique in financial inability situations. Data were analysed using a sample of 144 listed companies in Tehran Stock Exchange, during the period of 10 years (2007 to 2016), the data were combined and the multivariate regression model was analyzed. The results of research hypotheses indicate that there is no meaningful relationship between lack of liquidity, failure of operations and bankruptcy with big bath and the reason is that companies did not have an optimal focus on the use of big bath in the conditions of the financial inability. There is also a significant and reverse relationship between the failure to fulfil obligations and big bath, that shows companies facing disability obligations through big bath seek to improve the performance of obligations.