Earning persistence in Tehran Stock Exchange Listed Companies with Underscoring on Accrual Reliability

In this paper, relationship between earning persistence and accrual Reliability is studied. At first a comprehensive balance sheet categorization of accruals is presented and then each category according to the reliability of the underlying accruals is classified. The statistical population of this paper includes all the accepted companies in Tehran stock exchange and statistical sample contains 70 companies that have been chosen by stratified random sampling among statistical population, a period from 2002-2008. This paper includes 4 hypotheses. To examine the hypothesis, panel analysis has been used. The results indicate that less reliable categories of accruals lead to lower earning persistence and those investors do not fully anticipate the lower earning persistence, leading to significant security mispricing.