International Journal of Finance and Managerial Accounting, Vol.6, No.21, Spring 2021 185 With Cooperation of Islamic Azad University – UAE Branch The Effect of Managers’ Perception Bias Model on Earnings Management Narges Mohseni Dehkalani Ph.D. Candidate, Accounting Department, Islamic Azad University, Qeshm Branch, Qeshm, Iran dehkalani_n@yahoo.com Fereydoon Rahnamay Roodposhti Professor, Accounting Department, Islamic Azad University, Science and Research Branch, Tehran, Iran rahnama.roodposhti@gmail.com Hamidreza Kordlouie Associate Professor, Financial Management Department, Islamic Azad University, Eslamshahr Branch, Iran (Corresponding author) hamidreza.kordlouie@gmail.com Mohammad Hamed Khanmohammadi Assistant Professor, Accounting Department, Islamic Azad University, Damavand Branch, Iran Shadi Shahverdiani Assistant Professor, Management Department, Islamic Azad University, Shahre Qods Branch, Iran ABSTRACT This study evaluated the relationship between behavioral bias with an emphasis on perception bias and earnings management incentives among financial analysts, accountants, and auditors. The sample of this study included 10 experts in the fields of accounting and auditing. In terms of the technical dimension, the fuzzy method was used to include uncertainty in the research. Instead of using a pairwise comparison of factors, the non-rank comparison of the ELECTRE III method with a systematic review was used to study and rank the different dimensions of perception bias factors affecting the types of earnings management through the Delphi method and the opinion of the elite. The results of the study indicated that out of 65 variables of perception bias affecting the role of earnings management, 27 top biases were identified and prioritized. The obtained results showed that the highest effect on earnings management types was related to overconfidence bias, regret aversion, and self-serving bias being at the first to third ranks. Besides, based on the scenario-building in developing an optimal model, the model with a significant relationship between perception bias and all types of earnings management (real, accrual, efficient, and opportunistic earnings management) significantly was more accurate than those in which the relationship between perception bias with some types of earnings management was considered. Keywords: Behavioral finance, Perception bias, Attribution bias, Earnings management. Submit: 22/03/2020 Accept: 03/08/2020