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A Survey of the Role of Earnings Quality in Accurately Forecasting of Operational and Cash Circulation of Companies Listed on Tehran Stock Exchange

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  • Akbar Jelodari
  • Fatemeh Asadi Kordshouli

Abstract

Accuracy of financial prediction is one of the important goals of financial reporting as important information is provided for internal and external users. Accounting profit and its components are the information considered during decision making by people. The present study aimed to evaluate the relations and role of earnings quality on accuracy of prediction of operating cash flow of companies listed on TSE. To achieve study purpose, 25 active industries during 5 years (2009-2013) are selected. Then, by Cochran’s formula, a sample of 50 companies is selected. Based on the results of study, we can say by increase of earnings quality, accuracy of cash flow and operations forecast can be increased. Thus, earnings quality is a reliable criterion for accuracy of financial forecast of business units.

Suggested Citation

  • Akbar Jelodari & Fatemeh Asadi Kordshouli, 2016. "A Survey of the Role of Earnings Quality in Accurately Forecasting of Operational and Cash Circulation of Companies Listed on Tehran Stock Exchange," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 6(4), pages 82-89, October.
    • Handle: RePEc:hur:ijaraf:v:6:y:2016:i:4:p:82-89
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    References listed on IDEAS

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    1. Myungsun Kim & William Kross, 2005. "The Ability of Earnings to Predict Future Operating Cash Flows Has Been Increasing—Not Decreasing," Journal of Accounting Research, Wiley Blackwell, vol. 43(5), pages 753-780, December.
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    7. Finger, Ca, 1994. "The Ability Of Earnings To Predict Future Earnings And Cash Flow," Journal of Accounting Research, Wiley Blackwell, vol. 32(2), pages 210-223.
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    Cited by:

    1. Kimouche Bilal, 2021. "Persistence and Predictive Ability of Earnings: Evidence from France and the UK," Economics and Business, Sciendo, vol. 35(1), pages 190-200, January.
    2. Thuy Khang Huynh & Vijay Shenai, 2019. "Option Trading Volumes and Their Impact on Stock Prices at Earnings’ Announcements: A Study of S & P100 Stocks in the Post Crisis Era 2010-2017," International Journal of Academic Research in Accounting, Finance and Management Sciences, Human Resource Management Academic Research Society, International Journal of Academic Research in Accounting, Finance and Management Sciences, vol. 9(3), pages 83-103, July.

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