Studies conducted on real earnings management seek to identify abnormal levels of business unit activities since real earnings management is associated with a change in timing or structure of the real activities of a business unit. However, more limited studies have been conducted on the effect of real earnings management on investors' decisions and market stakeholders and types of companies' risks. Thus, the present study is an attempt to examine the market reaction to real earnings management, financial risk and business risk of companies listed on the Tehran Stock Exchange. The present study is descriptive in terms of nature and correlational in terms of method. The statistical population of the present study is the companies listed on the Tehran Stock Exchange during 2008-2018. A total of 260 companies were selected as statistical samples using the systematic elimination method. The data were collected from relevant and valid databases and analyzed using regression equations and panel data. The results revealed that the market reaction to real earnings management and financial risk of companies is negative and its reaction to business risk is positive. Real earnings management also has a significant effect on the financial and business risk of the studied companies.