Univrsity Of Tehran Press Accounting and Auditing Review 2645-8020 24 3 2017 11 22 Impact of Free Cash Flow on Real and Artificial Earnings Management Impact of Free Cash Flow on Real and Artificial Earnings Management 421 440 64284 10.22059/acctgrev.2017.224708.1007533 FA Maryam Nobakht MSc. Student in Accounting, Faculty of Literature and Humanities, Islamic Azad University of Bonab, Bonab, Iran Rasool Baradaran Hassanzadeh Associate Prof., Faculty of Management, Economics and Accounting, Islamic Azad University of Tabriz, Tabriz, Iran 0000-0002-2161-0321 Journal Article 2017 01 09 The purpose of this study is to examine the effect of free cash flow on the management of real and artificial earning in companies listed in the Tehran Stock Exchange during 2006 – 2016 by choosing 183 companies as sample. To test the hypotheses, multivariate linear regression with panel data has been used. In this study, free cash flows and real earnings management have been measured with two and three measures (earlier and latter measures respectively are free cash flows to the firm and business, and abnormal operating cash flows, abnormal production costs, abnormal discretionary costs and artificial earnings management though discretionary accruals). The results shows free cash flows with above mentioned criteria has a positive and significant impact on the criteria of real and artificial earnings management. That means with the increase in free cash flow, the irregular level of the criteria of real earnings management and also the amount of accruals items are increased. Actually the managers of the companies with high free cash flow have a good severity of action in manage of earnings management. Thus, the opportunist behavior of managers with surplus amount of cash can be explained through free cash flows theory. The purpose of this study is to examine the effect of free cash flow on the management of real and artificial earning in companies listed in the Tehran Stock Exchange during 2006 – 2016 by choosing 183 companies as sample. To test the hypotheses, multivariate linear regression with panel data has been used. In this study, free cash flows and real earnings management have been measured with two and three measures (earlier and latter measures respectively are free cash flows to the firm and business, and abnormal operating cash flows, abnormal production costs, abnormal discretionary costs and artificial earnings management though discretionary accruals). The results shows free cash flows with above mentioned criteria has a positive and significant impact on the criteria of real and artificial earnings management. That means with the increase in free cash flow, the irregular level of the criteria of real earnings management and also the amount of accruals items are increased. Actually the managers of the companies with high free cash flow have a good severity of action in manage of earnings management. Thus, the opportunist behavior of managers with surplus amount of cash can be explained through free cash flows theory. https://acctgrev.ut.ac.ir/article_64284_32d97acf09ea5a1c9847ae30ac8c8cfb.pdf