The Effect of the Three Sides of the Fraud Triangle (Pressure, Opportunity and Rationalization) on Earnings Management (Adjusted Beneish Model)

The aim of this study; Investigating the effect of the components of the fraud triangle on profit management based on the adjusted Benish model among the companies admitted to the Tehran Stock Exchange. In this research, six hypotheses based on the indicators of the fraud triangle including pressure, opportunity and rationalization were formulated, pressure has three subgroups (financial stability, financial leverage and financial goal), opportunity has two subgroups (the nature of the industry and the effectiveness of supervision). and rationalization have a subset (audit changes). The statistical sample includes 95 companies during the period from 1392 to 1401. The research method is archival and multiple linear regression was used to test the hypotheses. Data analysis has been done using Eviews econometrics software. The results of the research showed that the first side of the fraud triangle, which is pressure, along with its indicators (financial stability, financial leverage and financial goal) have a significant relationship with profit management. The second side of the fraud triangle, which is opportunity, along with one of its indicators (the nature of the industry) have a significant relationship with profit management, but another indicator (supervision effectiveness) has no significant relationship with profit management. The third side of the fraud triangle, which is rationalization and measured by the audit changes index, has no significant relationship with profit management.
Keywords: fraud triangle, pressure, opportunity, rationalization, profit management, adjusted Benish model.