M.A. Thesis:

The adjusting effect of audit quality on the relationship between active and passive institutional shareholders with earnings management

Institutional investors are large investors such as banks, insurance companies and investment companies. Such investors are divided into passive and active categories. Passive institutional investors have an instant trading strategy and therefore the current stock price is very important and they have a short-term and transient perspective. Active institutional investors consider the long-term performance of the company. The main purpose of this study is to determine the adjustment effect of audit quality on the relationship between active and passive institutional shareholders with earnings management in the Tehran Stock Exchange. The study was conducted over a 5-year period in 153 companies. Sample data of the studied companies were analyzed by analyzing their availability by classifying them using Excel software and analyzing them using Ives software. The research results showed; There is a positive and significant relationship between active, passive institutional investors as well as audit quality with earnings management. On the other hand, audit quality moderates the relationship between active institutional shareholders and earnings management in a positive and meaningful way. Larger auditors not only can not reduce the relationship between institutional investors active in earnings management, but also increase it. Perhaps the reason is the influence of active institutional ownership on the board. But the audit quality moderates the relationship between passive institutional investors and earnings management, and the relationship is negative and significant, which may be due to the lack of influence of institutional shareholders on the board and influencing corporate decisions.

Keywords: Keywords; Audit quality - Active and passive institutional shareholders - Profit management