Empirical Investigation on the relationship between Conservative Financial Reporting & Management Earnings Forecast Error

This study empirically investigated the relationship between conservative financial reporting & management earnings forecast error. The research sample includes 249 companies listed in Tehran Stock Exchange over the period 2009 - 2014. The multivariate regression model based on panel data is used to analyze the first hypothesis. The results showed that there is a significant and negative relationship between conservatism and management earnings forecast error. Also test for equality of means between series is used to analyze the second hypothesis. The results showed that pessimism managers differently used conservatism in financial reporting rather than optimism managers. Also, there is not any significant relationship between conservatism and management earnings forecast error in those observations that have pessimism earnings forecasts; but this relationship is significant in those observations that have optimism earnings forecasts.

Conservatism, Management Earnings Forecast Error.