Presenting a Reductive Model of Earnings Management Based on Multi- Grounded Theory Approach

Understanding the importance of earnings management is essential for internal and external users of financial statements. Some see this as a legal practice, while others see it as illegal manipulation of profits. Iran is no exception to the damage and growth of this economic phenomenon, so the first thing that crystallizes in the minds of some members of society is the question: What are the factors affecting the earnings management and ways to prevent or reduce earnings management? So The purpose of this study is to provide a reductive model of earnings management according to the conditions of Iran.

In this regard, the present study, using the qualitative method of multi-grounded theory through semi-structured interviews with 14 experts in the Iranian accounting profession in 1397-1398 which was selected by theoretical sampling method, the key points raised by them were coded and formatted. Concepts and categories were categorized and finally, succeeded in presenting a decreasing pattern of earnings management.

Based on the results of personality characteristics, business characteristics and motivation of managers causal and effective conditions on profit management reduction methods were identified. Also, the legal system, human resource management, the weakness of the accounting system, specialized knowledge and cultural factors of the context, and environmental factors were among the intervening conditions. Finally, the methods of profit management reduction include 7 categories, auditing quality control, strengthening corporate governance, updating the structure of laws and standards, strengthening and controlling the financial reporting framework, strengthening training, disciplinary discussions and classification monitoring and its consequences in the form of earnings management methods were identified and presented. One of the achievements of this research and the proposed model for reducing earnings management is that in this model, the concept of assembly time management is introduced, which is another way to perform earnings management. Time management of assemblies includes sub-categories such as assembly breathing, assembly relocation, assembly assembly in the last days and playing with shareholders' dividends, for later payment of dividends and using it elsewhere. Of course, It is possible that companies have been created in Iran due to the specific conditions of Iran.

earnings management has a very important impact on the company, the profession and the macroeconomic level. The role of financial statements is to provide a fair and equitable view of the situation and performance of the business unit. In practice, however, there may be opportunities to affect accounting information through the use of various methods and techniques, resulting in financial statements losing their performance and misrepresenting accounting information Manipulate profits. So, with the correct application of strategies and contextual conditions, it can be said that negative earnings management in companies can be reduced. Previous research has been done on modeling earnings management with quantitative methods, and this is not ineffective in terms of both knowledge and theoretical development in the field of earnings management.  Therefore, based on the findings of the present study, it can be stated that the model of the present study is used to educate and increase public awareness, especially of students in related fields, and more serious proceedings are taken in this regard.