The Effect of Managers' Ability on the Value Relevance of Earnings with Emphasis on the Role of Corporate Governance and Product Market Power

The purpose of this study is to investigate the ability of managers on the value relevance of earnings with respect to the role of corporate governance and product market power. The statistical the population of this study is all companies listed in Tehran Stock Market, in which 102 companies in the period 2012 to 2019 have been selected by systematic elimination method. For data analysis and hypothesis testing, multivariate regression model based on compound data is used. The results of estimating the research model indicate that the ability of managers has a positive and significant effect on the value relevance of earnings. The findings also showed that when corporate governance is weak, the effect of managers' ability on the value relevance of earnings increases. In addition, when the market power of the product is strong, the effect of managers' ability on the value relevance of earnings does not increase.  In general, these findings indicate that highly capable managers increase the value relevance of accounting information in capital market valuation.