1Professor of Finance & Accounting Islamic Azad University, Science & Research Branch Tehran, Iran
2Faculty Member of Accounting, Shahrood University of Technology Shahrood, Iran
3PhD Student of Accounting, Islamic Azad University, Science & Research Branch Tehran, Iran Corresponding Author
This paper analyzes the relationship between capital structure and earning management. For analysing we used 119 non-financial companies that listed in Tehran Stock Exchange from 2000 to 2008. The researchers will focus on comparing the Jones Model and the Modified Jones Model, which are the two most frequently used model in empirical analysis nowadays. Earnings management is a kind of management which uses accounting techniques to meet the executives. Researchers in this area found many approaches to detect the earnings management; within these approaches are the discretionary accrual models which include the modified. Our findings suggested a positive relationship between debt ratio and discretionary accruals is (0.000). Also there is a negative association between return on assets (ROA) and debt ratio. Finally return on equity and total assets related positively with debt ratio.
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