The Ability of Traditional and Relative (Percent) Accruals to Identify Undervalued Stocks

In traditional approach of measuring accruals، items are scaled by average total assets. Scaling accruals by earnings created a new concept entitled percent (relative) accruals. When accruals component of earnings scaled by earnings، this new definition of accruals was produced more efficient data to classifying. In this study the ability of percent and traditional accruals to identify disvalued stocks was investigated. In order to، sophisticated and naïve forecasts models was used. The sample included of 158 firms (1160 firms- year) listed on the Tehran Stock Exchange between 1380 to 1389. The research find that، in contrast with expectation، percent accruals approach haven''t more ability to identify undervalued stocks.