Investigating impacts of Cash Component of Earnings on earnings stability and stock return in firms listed in Tehran Stock Exchange

Earning quality structures are arisen from relationship between cash components and accruals. Earnings stability is a measure to assess earning quality. Earnings stability means the repeatability of current earnings. Therefore, the more stable earning, the more its quality will be, so it can be said that higher stability of the earning is due to its cash component. In this research, the effect of cash components of earnings on earnings stability and stock return in listed firms in Tehran Stock Exchange was investigated. The present research is an applied study and is correlational in terms of nature and content. The statistical population is firms listed in the Tehran Stock Exchange during the period 2009-2017 which their number was 157. To estimate the model, the Dynamic Panel Method was used and the results of the model estimation indicated that the coefficients related to the yield function variables in this year and free cash flows, changes in cash this year and the distribution of net cash equivalents to holders of equity this year at the confidence level of 95 % is significant and therefore the hypothesis that there is no effect between independent variables (with the exception of the distribution of Net to debt holders) on the earnings performance variable in the following year as the index of earning and return on shares of the firms admitted to the stock exchange is rejected, and the contradiction in the assumption of the effect of independent variables on the income performance variable in the following year as an indicator The earning and stock returns of the firms admitted to the stock exchange are accepted.

Keywords:

Cash components of earning , earning stability , stock returns