Investigating the relationship between the average asset age of recognized companies in Tehran Stock exchange with their performance and evaluating the rationality of market reaction against bubble of indicator of function

Abstract

Investors usually use the return ratios to make decision about the stock marketing. Under historical cost accounting, as the numerator of return ratios is measured based on the current values and the denominator of return ratios is measured based on the historical values, price rise, in case of inflation, causes the return rates inflate. In order to prove the existence of inflation in Return of Net Operating Asset (RNOA), the relationship between the RNOA and asset age was investigated and the results showed that there is positive relationship between RNOA and asset age. In the next step, in order to investigate the rationality of market reaction against the inflation in index of performance appraisal, the relationship between the market rate and asset age was examined and the results showed lack of relationship. The research was performed during 6 years (2006-2011) on 126 companies approved in Tehran Stock Exchange. The method used in testing the hypotheses was panel data which was done by Eviews7 software.