Abstract

This paper investigates the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE). The proposed study gathers the necessary data from 166 firms over the period 2004-2012 from firms whose shares were actively traded on TSE market. The study uses Panel data and with the implementation of linear regression technique examines four hypotheses. The results indicate that abnormal negative changes in cash are more persistence than positive abnormal changes. In addition, both positive and negative abnormal changes are more persistence than accruals. Market also has a good perception on abnormal positive and negative changes in cash.

Highlights

  • One of the most interesting issues in assessing the performance of financial firm is to look for the quality of earning and any abnormal change in earning may have different consequences on financial statements (Keynes, 1936; Baskin, 1987; Mishkin, 1986)

  • This paper investigates the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE)

  • We have presented an empirical investigation to study the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE)

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Summary

Introduction

One of the most interesting issues in assessing the performance of financial firm is to look for the quality of earning and any abnormal change in earning may have different consequences on financial statements (Keynes, 1936; Baskin, 1987; Mishkin, 1986). Ozkan and Ozkan (2004) studied the corporate cash holdings for a selected UK firms by concentrating on the importance of managerial ownership among other corporate governance characteristics such as board structure and ultimate controllers of firms. They presented some evidence of a substantial non-monotonic relationship between managerial ownership and cash holdings. This paper investigates the persistence of earnings components and pricing test of abnormal changes in cash for selected firms listed on Tehran Stock Exchange (TSE). The organization of this paper first presents details of the proposed study in section 2 while the results are given in section 3 and concluding remarks are presented in the last session to summarize the contribution of the paper

The proposed model
The Results
Testing the first hypothesis
Testing the second hypothesis
Testing the third hypothesis
Testing the fourth hypothesis
Conclusion
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