The impact of environmental uncertainty on earnings management effect on information asymmetry in companies listed on the Tehran stock exchange

Abstract

The present Research Aimed to Evaluate the Effect of Environmental Uncertainty on the Relation between Earning Management and the Information Asymmetry. In this way, a Sample Evaluated Including 106 Listed Companies in Tehran Exchange Stock during 2008-2013. To Test Hypothesis, Multivariate Regression and Panel Data were used. To Measure Information Asymmetry, the Proposed Scope of Bid-Ask Spread Was Used Following Venkatesh and Chiang (1986) Model. To Measure Earning Management, an Alternative Variable Called Discretionary Accruals Were Used and Estimated with Modified Jones (1991) Model. The Coefficient of Sale Variation is Also a Proxy Variable of Environmental Uncertainty of the Firms. Findings indicated that Managers by Earnings Management through Discretionary Accruals Reduced Earnings Volatility to react to the Undesirable Effect of Environmental Uncertainty Which is Effective on the Performance and Profitability of the Firms and they tried to hide it From Investors and Creditors Attention by Earnings Management, Which Lead to Increases the Information Asymmetry. © Serials Publications Pvt. Ltd.