An Examination of the Role of Cash and Accrual Components of Operating Income in Forecasting Firm Value in Tehran Stock Exchange

This study examines the role of cash and accrual components of operating income in forecasting firm value by a sample of 57 firms accepted in Tehran Stock Exchange (TSE) during the period of 1376-1385. We employed the Panel Data regression framework and also extended our study through an industry analysis. The findings revealed that there is a significant positive relationship between cash and accrual components of operating income and firm value. Also, predictive ability of cash component is better than accrual component of operating income. The industry analysis evidence shows that in most industries under study, cash component of operating income, and accrual component of operating income are better predictors of firm value.