The Moderating Position of Business Training on the Financial Literacy and Specialization of Audit Committee in Earnings Management

This study examines the moderating role of business education in the relationship between financial literacy, audit committee specialization, and earnings management in 120 companies listed on the Tehran Stock Exchange over the period 2014–2023. To test the research hypotheses, a multiple linear regression model with fixed effects and panel data methodology was employed. To address potential endogeneity and instrument-related issues, the two-stage least squares (2SLS) estimation method was applied. The results indicate that business education significantly reduces earnings management. Furthermore, the audit committee specialization indicators, including the proportion of members holding Certified Public Accountant (CPA) credentials, the proportion of members with a master’s degree or higher in accounting or finance, the proportion of members with professional experience in accounting or finance, and the proportion of members with experience in governmental organizations, also have a significant negative impact on earnings management. In addition, the interaction between business education and the financial literacy and specialization indicators of the audit committee strengthens their mitigating effect on earnings management. Audit committee independence likewise demonstrates a significant negative effect on earnings management. Overall, the findings suggest that the combination of financial expertise, professional experience, and business education of audit committee members enhances the effectiveness of oversight, reduces information asymmetry, constrains managerial opportunism, and ultimately improves the quality of financial reporting.