Information of capital market have an important impact in interpret of investors and their reaction to the disclosed financial information by the companies and is effective in the ability of management on the market through manipulation of financial reporting and as well as cash holdings referring to reduce the percentage of financial cost , which could affect the earnings management. The goal of this study was to investigate the relationship between information asymmetry and earnings management with an emphasis on cash holdings. For this purpose, using systematic elimination technique during the years of 2007 – 2013, 126 companies has been selected on Tehran Stock Exchange. The data was analyzed combined or synthesis and tested the hypothesis through F Limer and Housman tests and multivariate regression. The results of testing showed that information asymmetry is a significant and positive impact on earnings management. This relationship has a significant and positive effect with emphasis on cash holdings.
