Examination of the Relationships between Transactions with Related Parties, the Disclosure Rank, and the Evidences of Earnings Management in the Companies of Tehran Stock Exchange

Weakness in financial reporting was one of the reasons of scandals of big American companies and the most important thing in these weaknesses was in reporting exchanges with dependent persons. The presence of related party transactions is a sign of aggressive accounting. The presence of related party transactions is one of 9 main reasons that result in firms being forced to report their financial reports again. Accordingly, the goal of the present research is to identify the relationship between exchanges with dependent persons, disclosure rank, and evidence of earnings management in firms enlisted in Tehran Stock Exchange. In this, research 143 firms enlisted in Tehran Stock Exchange within the period between 2008 and 2012 have been investigated. To test the hypotheses we have used a multiple linear regression model. Research findings have shown that there has been a negative relationship between related party transactions and disclosure rank and there has been a positive and meaningful relationship between related party transactions and evidence of earnings management.