The Impact of High Earnings on the Informational Content of Cash Flows in the Listed Companies on Tehran Stock Exchange

Forough Heyrani (), Saeid Saeida Ardakani () and Mahboubeh Dehestani Ardakani ()
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Forough Heyrani: Islamic Azad University
Saeid Saeida Ardakani: Yazd University
Mahboubeh Dehestani Ardakani: Islamic Azad University

International Journal of Academic Research in Accounting, Finance and Management Sciences, 2013, vol. 3, issue 4, 215-223

Abstract: This paper tries to investigate the incremental informational content of cash flow from operations and earnings as well as the impact of high earnings on the informational content of cash flows and earnings by exploring the relationship between cash from operations and net earnings and companies’ stock return. The study sample was chosen over the time period of 2006 to 2010 of listed companies on Tehran Stock Exchange and included 150 selected companies using systematic elimination method. According to the theoretical principles and literature of the topic for analyzing data, one main hypothesis and four sub-hypotheses are were proposed and were tested along with the corresponding models. Findings suggest that earnings in relation to cash flow from operations have greater informational content. The high earnings also has no negative impact on the informational content of earnings and when earnings is at its high level, there is no difference between informational content of high and low cash flow.

Keywords: Stock return; Informational content; High earnings; Low earnings; High cash flows; Low cash flows (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:hur:ijaraf:v:3:y:2013:i:4:p:215-223

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