The Effect of Managerial Ability on Earnings Classification Shifting and Agency Cost of Iranian Listed Companies

Mohsen Imeni, Mohammad Fallah, Seyyed Ahmad Edalatpanah and Junhai Ma

Discrete Dynamics in Nature and Society, 2021, vol. 2021, 1-10

Abstract: The objective of this study is to examine the relationship between managerial ability and earnings classification shifting of firms listed in the Tehran Stock Exchange (TSE). The paper consists of a sample of 1,875 firm-year observations after applying systematic elimination sampling method during a period of fifteen years, from 2005 to 2019. This study used the multivariate panel data regression for testing the links between variables. The results of this study provide that there is a positive relationship between managerial ability and earnings classification shifting. The obtained results indicate that there is a negative relationship between managerial ability and real earnings management and no relationship between managerial ability and AEM. In addition, managerial ability mitigates the negative effect of earnings management on future firm performance. Furthermore, managerial ability affects its agency cost positively due to the reduction in earnings management. This paper contributes to developing management literature and financial reporting literature. The study focuses on links managerial ability and earnings classification shifting and agency cost in a developing country like Iran, and the results of the paper can fill distance theory and practice by empirical test. Furthermore, the results of this study indicate in an emerging market, namely, Iran, that has a political business environment among the other countries of the Middle East, managerial ability can release Iranian firms on economic sanctions and financial pressures. This paper is the first study of its type in Iran.

Date: 2021
References: Add references at CitEc
Citations: View citations in EconPapers (2)

Downloads: (external link)
http://downloads.hindawi.com/journals/ddns/2021/5565605.pdf (application/pdf)
http://downloads.hindawi.com/journals/ddns/2021/5565605.xml (application/xml)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:hin:jnddns:5565605

DOI: 10.1155/2021/5565605

Access Statistics for this article

More articles in Discrete Dynamics in Nature and Society from Hindawi
Bibliographic data for series maintained by Mohamed Abdelhakeem ().