Pages: 62-67

Abstract

Abstract: The aim of management is to show the company as stable and dynamic to investors and the capital market. Gaining a proper place among the competitors and capital market makes investors and creditors have a favorable opinion of the company and the company needless of spending more cost in competition with other similar companies and receive loans and credits with less cost. The purpose of this paper is to examine the impact of the instability of earnings on the earnings forecast error with an emphasis on managerial inefficiency based on a sample of 130 year-company among the companies listed in Tehran Stock Exchange during the period from 2009 to 2013. Results showed that instability of earnings has a significant positive impact on earnings forecast error in companies with management inefficiencies. Moreover, the results showed that earnings forecast error has a significant difference in companies with efficient and inefficient management.