Eranings Increasing or Decreasing Accounting choices: with emphasis on the role of firm size and corporate governance

Managers, having a higher level of awareness about the stakeholders, try to make the image of the business unit look favorable. Therefore, they make choices that can have different effects on users' decisions. The aim of the current research is to investigate the role of two factors, company size and corporate governance, on choices that increase or decrease accounting earnings.

The statistical sample includes 180 companies (1440 companies-year) from the manufacturing companies admitted to the Tehran Stock Exchange during the period of 2013 to 2014. The research hypotheses have been tested using panel data and multivariate logistic regression.

The results show that the corporate governance factor as well as the company size factor have an inverse and significant relationship with the choice of increasing or decreasing accounting earnings methods. 

In companies, the accounting earnings is determined by the accrual method and by applying the opinion of the managers.In this regard, managers influence earnings by choosing their methods. There are many choices for managers in the process of preparing financial reports that can increase or decrease the company's earnings.

Contribution: 

This research can provide a new study platform regarding accounting choices in the sense that it draws the attention of standard-setting institutions to the diversity of accounting methods and the freedom of action of managers in choosing methods.