Quality of accruals, CEO tenure and conditional conservatism in the Tehran Stock Exchange

The high volume of free cash flow in a business unit can intensify the conflict and mismatch between the interests of managers and shareholders and, consequently, increase the problems of representation between managers and shareholders. Therefore, increasing free cash flows and the consequent tendency of managers to make inefficient use of available resources can increase agency problems, which referred to as free cash flow agency costs. On the other hand, the need for conservative reporting allows the losses from over-investment to identify sooner. Hence, the level of conditional conservatism will increase with increasing representation costs due to free cash flows. The main purpose of this study is to investigate the relationship between the representation costs of free cash flows (surplus or surplus cash) and conditional conservatism in the Tehran Stock Exchange. The results of  tests on 140 listed companies in the Tehran Stock Exchange during the period 2013 to 2018 indicate that there is a positive and significant relationship between additional cash (free cash flow representation costs) and conditional conservatism. In fact, the results showed that the costs of free cash flow representation have a positive effect on conditional conservatism.