the impact of financial distress on earnings management with the moderating role of internal control

The obvious violations of the preparers of financial statements by accounting principles are
reflected in the auditors' reports and are dealt with legally, but earning management
techniques are not easily discernible. (graham& Partners, 2015). Existence of internal
control system can ensure the users of financial statements that the managers of the
company have not used earning management techniques in the financial reports. The use of
earning management techniques in financial distress circulations imposes a greater risk on
users of financial statements.
In addition to examining the relationship between financial distress and the use of real and
accrued earnings management techniques, this study examines the adjustment relationship
between weakness in the internal control system and the use of accrual and real earnings
management techniques. For this purpose, the information of 138 companies listed on the
Tehran Stock Exchange in the years 1392 to 1398 has been used.
The results indicate that regardless of the modifier variable of weakness in internal control,
financial distress has a positive effect on accrual earnings management and a negative
effect on real earnings management. Considering the modifier variable of weakness in
internal control, it was found that this variable plays a moderating role between financial
distress and accrued earnings management, but does not play a moderating role between
financial distress and real earnings management.