Examining the Relationship Between Reliability Components of the Earning and Earnings Persistence.

Subject Areas : Financial Knowledge of Securities Analysis

Ali Akbar Chaharmahali ¹ , Javad Zahedi ² , Reza Barati ³ , Mostafa Amiri ⁴

1 - نویسنده اصلی و مسئول مکاتبه
2 - ندارد
3 - ندارد
4 - ندارد

Received: 2009-05-04 Accepted : 2009-06-15 Published : 2009-03-21

Keywords: The components of the earning, Accrual items, The quality of the&#x0D, &#x0D, earning, The persistence of the earning,

Abstract :

The primary purpose of this research is : '' examining the relationshipbetween reliability components of the earning and earnings persistence. Thecomparison of the persistence of components of the earnings.'' So the mainquestion of this research is as follows: Is the persistence of different componentsof earnings the same ?In this research we have made use of operational earnings and theinformation of Accrual items of 113 firms which were stock exchange membersbetween 1378- 1386. To test the hypotheses of the research, we have made useof the multivariant linear regression method. To examine the meaning fullness ofthe differences between regression coefficients , we have made use of vald testand complete and decreased models of regression.Accounting earnings are divided into two parts of cash and accrual sections. Theaccrual section is divided into three more parts of current operational activities,and non cash operational activities , accrual items of finance activities. First wecompared the persistence of cash section of earnings with the persistence ofaccrual section of earnings then we compared the persistence of cash section ofearnings with the persistence of accrual components. Finally the persistence ofaccrual section of earnings have been compared with each other.The persistence of accrual element of earnings is lower that of cash elementof earnings the reason for this is that the larger amount of the subjectivity ofaccrual items and their reliability is lower than cash element to the results of thisresearch show that the persistence of cash section has a meaningful differencewith the persistence of accrual section and its components. On the one handwhen the accrual section of earnings is unusually high or low the earning haveless persistence. On the other hand the difference between the persistence ofaccrual components of earnings is not high and statistically , none of thesedifferences are meaningful the results of this research show that the earnings ofthe firms in which the cash section of earnings is higher than that of the wholeearnings the earnings will have more persistence.