Effect of Accounting Conservatism Level, Debt Contracts and Profitability on the Earnings Management of Companies: Evidence from Tehran Stock Exchange

The main objective of this study is to investigate the effect of accounting conservatism level, debt contracts and profitability on the earnings management of listed companies in Tehran Stock Exchange. For this purpose, a sample of 700 firm-years during the time span of 2006 to 2010 was chosen to test the research hypotheses. The research results indicate that the variables of accounting conservatism level and return on equity have positive and significant relationship with earnings management of studied companies and indicate that companies that have higher levels of conservatism and earnings management, their earnings management is more. In addition, the results showed that there is a significant and negative relationship between debt contracts and earnings management and also, firm size and audit firm size have no effect on earnings management.