Allameh Tabataba’i University Empirical Studies in Financial Accounting 2821-0166 13 50 2016 06 21 The Effect of Earnings Management on the Performance of Accounting Earnings-Based on Valuation Models The Effect of Earnings Management on the Performance of Accounting Earnings-Based on Valuation Models 185 203 7063 10.22054/qjma.2016.7063 FA Abbas I Aflatooni 0000-0002-0573-376X Journal Article 2016 05 02 <br />Some valuation models use the accounting earnings and others use the cash flows as inputs to <br />measure the intrinsic value of stocks. The empirical evidences show that the performance of <br />earnings-based models is generally higher than that of non-earnings-based models. In addition, <br />based on empirical evidences, earnings management that is done using accruals and real activities <br />manipulation; shift the earnings quality, and using the managed earnings in earnings-based <br />valuation models lead to incorrect results. The first stage of this research that is done on 116 <br />firms listed in Tehran Stock Exchange from 2003 to the end of 2013 compares the performance of <br />Residual Income Model (RIM) and discounted cash flow model (DCF). The second stage compares the <br />performance of mentioned models in suspected and non- suspected firms to earnings management and to <br />control the effects of some variables on results, the regression analyses is applied. The research <br />results show that, although in total sample the performance of RIM is higher than that of <br />discounted DCF, the performance of RIM is significantly lower than that of DCF in suspected firms. <br />Some valuation models use the accounting earnings and others use the cash flows as inputs to <br />measure the intrinsic value of stocks. The empirical evidences show that the performance of <br />earnings-based models is generally higher than that of non-earnings-based models. In addition, <br />based on empirical evidences, earnings management that is done using accruals and real activities <br />manipulation; shift the earnings quality, and using the managed earnings in earnings-based <br />valuation models lead to incorrect results. The first stage of this research that is done on 116 <br />firms listed in Tehran Stock Exchange from 2003 to the end of 2013 compares the performance of <br />Residual Income Model (RIM) and discounted cash flow model (DCF). The second stage compares the <br />performance of mentioned models in suspected and non- suspected firms to earnings management and to <br />control the effects of some variables on results, the regression analyses is applied. The research <br />results show that, although in total sample the performance of RIM is higher than that of <br />discounted DCF, the performance of RIM is significantly lower than that of DCF in suspected firms. https://qjma.atu.ac.ir/article_7063_68a15b5278e4f7c4c056df9d5f1d3b1f.pdf