The Effect of World Uncertainty on Earnings Management with the Moderating Role of Institutional Ownership

Document Type : Research Paper

Authors

1 MSc, Department of Accounting, University of Mazandaran. Babolsar, Iran.

2 Full Professor, Department of Accounting, University of Mazandaran. Babolsar, Iran.

Abstract

Abstract:

Uncertainty is inherent in economic activities, prompting varied managerial responses. Earnings management, driven by diverse motivations, serves as a key mechanism to mitigate uncertainty, with its effectiveness shaped by ownership structure. This study investigates the impact of uncertainty on earnings management, encompassing both accrual-based and real earnings management, while exploring the moderating role of institutional ownership. Using data from 122 companies listed on the Tehran Stock Exchange from 2005 to 2022, the study employs multivariate regression analysis with panel data. The findings reveal a significant positive relationship between the World Uncertainty Index (WUI) and both accrual-based and real earnings management. Additionally, institutional ownership moderates the effect of the WUI on real earnings management. These findings are useful for auditors, investors, and analysts.

Keywords

Main Subjects

References

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Journal of Accounting Advances
Volume 16, Issue 2
February 2024
Pages 243-283

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History

  • Receive Date: 19 November 2024
  • Revise Date: 15 February 2025
  • Accept Date: 22 February 2025

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