Information Processing Styles and Earnings Management: Testing of Cognitive-Experiential Self Theory

The purpose of this research is to study the effect of rational and experiential information processing style on opportunistic and efficient earnings management based on Cognitive – Experiential Self Theory. For this purpose, the number of 250 accountants and financial managers of listed firms in Tehran Stock Exchange were selected as research sample. Research theoretical framework collect by library study and research data gathering was conducted via questionnaire. Also, the research hypotheses were tested through structural equations modeling. Research findings show a negative relation between rational information processing style and opportunistic earnings management and a positive linkage between experiential information processing style and opportunistic earnings management. Also, this evidence indicates a positive relation among both type of information processing styles and efficient earnings management. Based on these findings, it can be concluded that information processing style as an individual and cognitive feature influences the types of profit management as one of the financial decisions.