Examining the factors affecting earnings persistency among the listed firms in Tehran Stock Exchange

Abstract

There are various studies which define earnings persistency as the durability and recurrence of the earnings. This study intends to examine some of the factors influencing on the earnings persistency among Tehran listed firms. We have used first order auto regression to determine the persistency of the earnings. The data of this paper covers a period from the years from 2006 to 2009. Using cross-sectional regressions and pool data, the data were analyzed. The findings on 444 firm-year observation revealed that the operating cash flow, firm size, interest bearing debts and directors’ independence have direct impacts on the earnings persistency. The higher the cash component of the earnings, the lower the interest bearing debts is. Finally, when the independence of the directors is higher, the persistence coefficient and earnings persistency will be at a higher level.