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Accruals Quality and Bankruptcy in Shirata Model (Case Study: Tehran Stock Exchange)

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  • Bagheri, Oveis

    (Faculty of Management, University of Tehran)

  • Ranjbaran Jalili, Mona

    (Department of Accounting, Fontbonne University)

Abstract

In this research, the relationship between accruals quality and bankruptcy of companies has been studied. According to Dechow et al.'s (1995) model, the quality of accruals was measured, and according to the Shirata model (1998), bankruptcy was examined. Operations were considered as the control variables. The research hypothesis was tested using a multivariate regression model and a combined data method. The study's statistical sample consists of 197 companies listed on the Tehran Stock Exchange from 2011 to 2019. The results showed a significant and negative relationship between the quality of accruals and bankruptcy of the companies. It means that in bankruptcy, the use of earnings management through optional accruals reduces the quality of accruals. The results indicate that size, return on assets, and audit quality all significantly impact the quality of accruals. Besides, the leverage, life, and operating cash flow have a significant and negative effect on accruals' quality. However, the ratio of market value to book value does not significantly affect the quality of accruals.

Suggested Citation

  • Bagheri, Oveis & Ranjbaran Jalili, Mona, 2020. "Accruals Quality and Bankruptcy in Shirata Model (Case Study: Tehran Stock Exchange)," Journal of Money and Economy, Monetary and Banking Research Institute, Central Bank of the Islamic Republic of Iran, vol. 15(4), pages 381-402, October.
    • Handle: RePEc:mbr:jmonec:v:15:y:2020:i:4:p:381-402
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    References listed on IDEAS

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    More about this item

    Keywords

    Quality of Accruals; Bankruptcy; Shirata Model; Tehran Stock Exchange; Profit Management;
    All these keywords.

    JEL classification:

    • A11 - General Economics and Teaching - - General Economics - - - Role of Economics; Role of Economists
    • G33 - Financial Economics - - Corporate Finance and Governance - - - Bankruptcy; Liquidation
    • H83 - Public Economics - - Miscellaneous Issues - - - Public Administration

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