Evaluating the effect of family relations in the board of directors on profit management by applying "dechow and dichev" and "kothari" models

Abstract

The main purpose of this research is to evaluate the effect of family control over the profit management in the listed companies on the Stock Exchange in Tehran. In this research, the profit management is considered as the dependent variable and the control of the company is considered as the independent variable. Dechow and Dichev and Kothari Models have been used to measure the profit management. In addition, a dummy variable is used to measure the company's control. The research population is the listed companies in Tehran Stock Exchange and the sample consisted of 32 family firms that were selected using systematic elimination method. The research is from 2007 to 2012. Research hypotheses have been testedusing correlation method between variables and multiple regression equations through panel data method. The results suggest that family relations have a significant impact on the Board of Directors on profit management using Dechow and Dichev, and Kothari Models.

Keywords: family firms, family control, family business, discretionary accruals, profit management practices