Investigating the Relationship between Achieving Profit Target and Profit Quality in Companies Listed on the Tehran Stock Exchange

The purpose of this study is to investigate the relationship between the level of achievement of profitability goals and profit quality in companies listed on the Tehran Stock Exchange.

How are the objectives achieved? Include the main method(s) used for the research. What is the approach to the topic and what is the theoretical or subject scope of the paper?

The research hypotheses are based on data collected from 159 companies listed on the Tehran Stock Exchange during the years 1393 to 1398. To analyze the data and test the hypotheses, a multivariate linear regression model using the combined data method was used.

The results of this study indicate that at 95% confidence level there is no significant relationship between the achievement of profitability goals and accrued earnings management. On the other hand, the rate of achievement of profitability goals has a significant negative impact on real profit management. The results also show that companies that achieve their profitability goals are more inclined to smooth their profits.

Originality/Value: 

This study contributes to the literature by providing new empirical evidence on the effects of projected profits. The findings of this study can help investors to make better investment decisions. Our findings also have important implications for policymakers and regulators.