Real Earnings Management and Stock Returns: Moderating Role of Cross-Sectional Effects

Stock returns can be considered as a product of price discovery mechanism. In studies related to the relationship between earnings management and stock returns, the relationship, direction and endogenous nature of earnings management, that is, cross-sectional effects, have been neglected. The purpose of this research is to investigate the relationship between earnings management and stock returns, considering the role of cross-sectional effects of market beta, Firm size and value effect. The information required for this study is taken from the financial statements of 165 companies in the period 1391-1400. In terms of purpose, the research is part of applied research and the research method is correlational in terms of nature and content, and panel analysis has been used to analyze the hypothesis The results of the research hypotheses test showed that there is a positive and significant relationship between real earnings management and stock returns, and in companies with higher beta, large companies and companies with higher value effects, the relationship between real earnings management and stock returns is stronger.