A comparative investigation into the Effects of Management Myopia and Earnings Management on Stock Return

Document Type : Research Paper


1 Assistant Prof., Faculty of Economic-Management and social Sciences, Shiraz University, Shiraz, Iran

2 MSc. in Accounting, Islamic Azad University-Marvdasht Branch, Iran


This study is an empirical investigation of myopic management and its short and long-term outcomes to examine the market ability in evaluating such activities for the firms which decreases marketing and R&D expenditures to increase their earnings. The methodology applied to this research is correlational and in order to test the research hypotheses, a sample including 78 firms accepted in Tehran Stock Exchange (TSE) from 2007 to 2011 (to calculate the prospect return of firms, stock return of 2012 is considered, too) is selected and examined. The results show that while myopic management has a short-term positive return, it has a great negative impact on firm's long-term return. Furthermore, regarding long-term outcomes, myopic management has more negative outcomes for long-term horizons in comparison with earnings management.