The Relationship between Acceptable Audit Report and overvaluation of stocks and Earnings Management and Conservatism

This research investigates the relationship between auditor's acceptable opinion and overvaluation of stocks and earnings management and accounting conservatism. The dependent variable of the research is the auditor's acceptable opinion and the independent variables of the research include the proxies of overvaluation of stocks (ratio of price per share to profit of delayed share and ratio of price per share to value of delayed share) and proxy of earnings management (discretionary accruals) and proxy of conservatism (Givoly and Hayn's proxy for unconditional conservatism based on accruals). This is an applied research and the statistical procedure includes logistic regression. The statistical sample of the research includes 429 companies-years of companies listed on the Tehran Stock Exchange from 2014 to 2020. The results of testing the research hypotheses show that in the companies surveyed in this period, the auditor's acceptable opinion has no significant relationship with overvaluation of stocks and earnings management and conservatism. Also, the kind of audit firm and the size of the company and the change of the auditor and the Inventory turnover and return on assets are not effective in providing an acceptable audit report, but the auditor's acceptable report has a positive relationship with last year's acceptable report and a significant negative relationship with financial leverage.