A study of the impact of cash and earning persistence on stock return in the Tehran Stock Exchange

Abstract

Cash flows from operating activities are one of the main indices used to assess how far a business entity's activities have resulted in sufficient cash flows to pay off loans, maintain throughput, and pay dividends, as well as how far they have facilitated new investments without using financial resources. Furthermore, given that the stock return is the primary criterion for shareholders when selecting stocks, and given that the factors influencing the stock return can be used to forecast the stock return for future investments, the purpose of this research is to survey the effects of cash and earning persistence components on the stock return in the Tehran Stock Exchange. From 2009 until the end of 2015, 129 non-financial companies were listed on the Tehran Stock Exchange. They were chosen through a screening process. The data was analyzed using the least squares approach. According to the findings, cash flows from operating activities, cash flows from returns and earnings, cash flows from income tax activities, cash flows from investing activities, cash flows from financing activities, and earning persistence all have a positive and significant effect on stock return. Furthermore, the results show that earning persistence has a positive and significant effect on the link between cash and stock return components.