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Nobakht, M., Nobakht, Y. (2025). The Moderating Role of Establishing the Audit Committee and Auditor's Expertise in the Industry on the Relationship between Free Cash Flow and Accrual Earnings Management. Electronic and Cyber Defense, 1(4), 83-107.
Maryam Nobakht; Younes Nobakht. "The Moderating Role of Establishing the Audit Committee and Auditor's Expertise in the Industry on the Relationship between Free Cash Flow and Accrual Earnings Management". Electronic and Cyber Defense, 1, 4, 2025, 83-107.
Nobakht, M., Nobakht, Y. (2025). 'The Moderating Role of Establishing the Audit Committee and Auditor's Expertise in the Industry on the Relationship between Free Cash Flow and Accrual Earnings Management', Electronic and Cyber Defense, 1(4), pp. 83-107.
Nobakht, M., Nobakht, Y. The Moderating Role of Establishing the Audit Committee and Auditor's Expertise in the Industry on the Relationship between Free Cash Flow and Accrual Earnings Management. Electronic and Cyber Defense, 2025; 1(4): 83-107.

The Moderating Role of Establishing the Audit Committee and Auditor's Expertise in the Industry on the Relationship between Free Cash Flow and Accrual Earnings Management

مطالعات حسابرسی مطهر
Article 4, Volume 1, Issue 4, February 2024, Pages 83-107    PDF (916.99 K)
Document Type: Original Article
Authors
Maryam Nobakht1; Younes Nobakht* 2
1Ph.D. Student in Accounting, Faculty of Humanities, Islamic Azad University, Zanjan branch, Iran
2Ph.D., Department of Finance and Accounting, Faculty of Economics and Administrative Sciences, University of Selcuk, Konya, Turkey
Receive Date: 16 June 2024,  Revise Date: 28 September 2024,  Accept Date: 09 October 2024 
Abstract
Managers may manipulate profit through accruals to hide the negative effects of their improper use of free cash flows. This study, while reviewing the relationship between free cash flow and accrual earnings management, has examined the adjusting role of the establishment of the audit committee and auditor's expertise in the industry on the relationship between free cash flow and accrual earnings management in the companies listed on the Tehran Stock Exchange with a sample of 133 firms (1330 observation) for the years 2011-2021. Research hypotheses were tested using multivariate regression models. Chen, San, and Zhou's model was used to measure free cash flow, and the modified Jones model was used to test accrual earnings management. Also, the numbers zero and one have been used to calculate the adjusting variables of establishing the audit committee and the auditor's expertise in the industry. Findings show a positive and significant relationship between free cash flow and accrual earnings management. On the other hand, establishing an audit committee and the auditor's expertise have weakened the relationship between free cash flow and accrual earnings management. Thus, the results indicate that the audit committee as an internal supervisor and industry expert auditor as an external supervisor can limit the behavior of managers in misusing free cash flows and hiding its negative effects by manipulating accruals.
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