M.A. Thesis:

CEOs’ Financial Knowledge, Earnings Management and Conservatism

Managers often manage profits to mislead shareholders about the true economic performance of the company. It is therefore not surprising that different stakeholders of the company consider profit management to be undesirable and try to reduce the authority and authority of managers by intensifying their supervision. In this regard, shareholders view conservatism as a supervisory and corporate governance tool that limits earnings management; on the other hand, since managers' prior experience and knowledge influence firm decisions, in this research relationship The relationship between CEO financial knowledge, earnings management and corporate conservatism in a sample of 166 companies listed on the Tehran Stock Exchange during 2014 to 2018 was evaluated. In this study, we used the McNichles (2002) model to measure earnings management, and the Khan and Watts (2005) model to measure conservatism. The results of regression analysis showed that CEO financial knowledge had a direct and significant effect on earnings management but the effect of CEO financial knowledge on conservatism was not significant. A direct sign of the relationship between CEO's financial knowledge and earnings management is that having CEO's financial knowledge avoids manipulating corporate financial reporting to increase personal profits and managers with financial knowledge will not agree

Keywords: Chife executive officer Financial Knowledge, Earning Management and Conservatism, Accruals.