American Journal of Scientific Research ISSN 2301-2005 Issue 66 (2012), pp. 151-161 © EuroJournals Publishing, Inc. 2012 http://www.eurojournals.com/ajsr.htm The Effective Factors on Abnormal Errors in Profit Forecast in Tehran Stock Exchange Mehdi Vasei Chaharmahali Department of Accounting, Islamic Azad University Neyshabur Branch, Neyshabur, Iran E-mail: Mehdi.vassei@gmail.com Mahmood Mostafazadeh Mashadi Department of Accounting, Islamic Azad University Neyshabur Branch, Neyshabur, Iran E-mail: mostafazadeh@aol.com Zahra Ghasemi Department of Accounting, Social Sciences & Economics Faculty Alzahra University, Iran E-mail: zghzghasemi@gmail.com Zahra Abedi Department of Accounting, Social Sciences & Economics Faculty Alzahra University, Iran E-mail: zahra.abedi@yahoo.com Ahmad Abdollahi Department of Accounting, Golestan Institute of Higher Education Gorgan, Iran E-mail: ahmabdollahi@gmail.com Tel: +98-911-2710207; Fax: +98-171-6627322 Abstract In recent years, many studies have been done on accuracy of profit forecast by the management of an organization. In this research, the effects of seven variables; stock exchange acceptance precedence, size of company, financial leverage, type of industry, Return of Assets (ROA), auditor’s report and auditor’s nature (credibility) have been tested against abnormal errors in profit forecast by managements of stock exchange accepted companies. Taking into account the recession period in which this study has been done, market index fluctuations have been considered as a controlling variable too. Using a sample of 82 stock exchange accepted companies in 2004 to 2008, comprising of a set of 5740 data, the outcome shows that there is a significant relationship between stock exchange acceptance precedence, Return Of Assets variables and abnormal error in profit forecast; but no such relationship exists for other variables like size of company, financial leverage, type of industry, auditor’s report and auditor’s credibility with abnormal error in profit forecast.