The effect of internal control on earnings quality in Iran

Abstract

Purpose

The purpose of the present research is to examine the effect of internal control and risk management on earnings quality of companies listed on the Tehran Stock Exchange (TSE).

Design/methodology/approach

Data were collected from 560 listed firms on TSE, which were selected using systematic sampling. Descriptive statistics, Pearson correlation and panel data regression were used for data analysis during 2009-2014.

Findings

The results showed that earnings management reduces earnings relevance and book value relevance through short-term and long-term discretionary accruals.

Originality/value

The outcomes of the current study are quite interesting to academia and practitioners.

Citation

Salehi, M. and Bahrami, M. (2017), "The effect of internal control on earnings quality in Iran", International Journal of Law and Management, Vol. 59 No. 4, pp. 534-546. https://doi.org/10.1108/IJLMA-02-2016-0012