The main purpose of this study is to investigate the effect of profit management on overinvestment in companies accepted in Tehran stock exchange. In order to measure profit management, discretionary accruals have been employed using modified version of Jones Model. The research population includes three selected industries of cement, basic metals, and automobile and spare parts manufacturing. Data was gathered after selecting the sample via selective method for the time period 1386-1390. To analyze the data and examine the hypotheses, linear regression model has been used on SPSS 20 and Eviews 7.1. Findings show no significant relationship between profit management and overinvestment. Also the relationship was assessed based on type of industry and the effect was modified using linear regression model. Again findings showed no significant relationship and no significant change was made in the results.
