The Effect of Disclosing Earnings Forecasting Characteristics on Company Risk concerning to Real Earnings Management
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Abstract:
Earnings prediction is one of the most important communication channels for transferring information to investors. Despite the importance of earnings prediction, few studies examined whether real earnings management are effective in predicting them. In this paper, the effect of earnings forecasting on firm risk is reviewed by considering real earnings management. Since earnings prediction characteristics and firm risk have an impact on each other, two-step least - squares regression is used to the impact of earnings forecasts characteristics on risk-taking of listed companies at Tehran stock exchange. The results of reviewing 155 companies by screening method from 2007 to 2018 showed that the characteristics of disclosure of earnings forecast had a negative and significant effect on risk-taking. The results also showed that real earnings management significantly weakened the relationship between managers ' earnings forecasts and risk-taking.
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Journal title
volume 12 issue 45
pages 63- 91
publication date 2020-07
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