THE COMPARISON OF EARNINGS AND CASH FLOWS AS MEASURES FOR FIRM PERFORMANCE: THE ROLE OF ACCRUALS

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MASHAYEKHI B.; SHARIATI AYOURI A.R.

مرکز اطلاعات علمی Scientific Information Database (SID) - Trusted Source for Research and Academic Resources

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Journal: FINANCIAL ACCOUNTING Year:2010 | Volume:1 | Issue:4 Page(s): 1-25

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Title

THE COMPARISON OF EARNINGS AND CASH FLOWS AS MEASURES FOR FIRM PERFORMANCE: THE ROLE OF ACCRUALS

Author(s)

MASHAYEKHI B. | SHARIATI AYOURI A.R. | Issue Writer Certificate

Keywords

STOCK RETURNSQ2

OPERATIONAL CASH FLOWSQ3

ACCRUALSQ2

EARNINGSQ3

LONG-TERM MEASUREMENT INTERVALSQ3

SHORT-TERM MEASUREMENT INTERVALSQ3

Abstract

A large number of financial information users are using the EARNINGS for measuring firm performance. Another measurement tool for this purpose is net cash received. When the cash flows statement was not mandatory for preparation, EARNINGS was the only performance measurement criteria, but after that the cash was the next one. However, there are many people who are adapting EARNINGS for their evaluation purposes yet. This paper investigates the ability of both EARNINGS and cash flows to measure firm performance. For this purpose, we investigate the data for 82 listed firms in Tehran Stock Exchange the period 1379-1386. The results show that in the shorter the performance measurement interval the EARNINGS has stronger relation to the firm performance (stock return). Besides, when the firm's operating cycle is getting longer, the relation between firm performance (stock return) and cash flows is getting stronger. On the other hand, ACCRUALS play an important role to reflect firm performance. However, if the absolute amount of ACCRUALS is large, the relation between EARNINGS and stock return will be weaker than the relation between cash flows and stock return.

Cites

A SURVEY ON THE RELATIONSHIP BETWEEN EARNINGS MANAGEMENT BASED ON TOTAL DISCRETIONARY ACCRUALS AND SOME MECHANISMS OF CORPORATE GOVERNANCE IN COMPANIES LISTED IN TEHRAN STOCK EXCHANGE

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APA: Copy

MASHAYEKHI, B., & SHARIATI AYOURI, A.R.. (2010). THE COMPARISON OF EARNINGS AND CASH FLOWS AS MEASURES FOR FIRM PERFORMANCE: THE ROLE OF ACCRUALS. FINANCIAL ACCOUNTING, 1(4), 1-25. SID. https://sid.ir/paper/168187/en

Vancouver: Copy

MASHAYEKHI B., SHARIATI AYOURI A.R.. THE COMPARISON OF EARNINGS AND CASH FLOWS AS MEASURES FOR FIRM PERFORMANCE: THE ROLE OF ACCRUALS. FINANCIAL ACCOUNTING[Internet]. 2010;1(4):1-25. Available from: https://sid.ir/paper/168187/en

IEEE: Copy

B. MASHAYEKHI, and A.R. SHARIATI AYOURI, “THE COMPARISON OF EARNINGS AND CASH FLOWS AS MEASURES FOR FIRM PERFORMANCE: THE ROLE OF ACCRUALS,” FINANCIAL ACCOUNTING, vol. 1, no. 4, pp. 1–25, 2010, [Online]. Available: https://sid.ir/paper/168187/en

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