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The Role of Accrual Earnings Management Dimensions
in Determining Corporate Cash Holding Policies
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Mojtaba Mohammadian *    |
| , Faculty of Economics, University of Tehran |
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Abstract: (18 Views) |
| This study examines the effect of the dimensions of accrual-based earnings management on cash holdings among firms listed on the Tehran Stock Exchange (TSE). Specifically, accrual-based earnings management is examined along two dimensions: the direction of earnings management and its magnitude. The sample comprises 102 firms from six industries listed on the TSE over the period 2011–2024. Discretionary accruals are estimated using the Modified Jones Model, and the hypotheses are tested using panel-data regression with a fixed-effects specification. The results indicate that the direction of accrual-based earnings management has a negative and statistically significant effect on cash holdings, such that higher discretionary accruals are associated with lower levels of corporate cash holdings. In contrast, the magnitude of accrual-based earnings management has no statistically significant effect on cash holdings. Furthermore, the industry-level analysis indicates that the relationship between the direction of earnings management and cash holdings differs across industries. Overall, the findings suggest that the direction of earnings management has greater explanatory power than its magnitude in explaining corporate cash-holding policies. These findings highlight the importance of considering the direction of managerial intervention in the financial reporting process when understanding the relationship between accrual-based earnings management and corporate cash-holding policies. |
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| Keywords: Cash holdings, Accrual-based earnings management, Discretionary accruals, Tehran Stock Exchange |
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Full-Text [PDF 853 kb]
(8 Downloads)
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Type of Study: Research |
Subject:
Special
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