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Studying the Impact of Prior Years Adjustments on Earnings Persistence

Author Affiliations

  • 1Department of Accounting, Shahroud Branch, Islamic Azad University, Shahroud, IRAN
  • 2Dept. of Business Administration, Strategic Management Concentration, Farabi Institute of Higher Education, Alborz, IRAN

Res. J. Recent Sci., Volume 4, Issue (11), Pages 42-45, November,2 (2015)


The present research discusses the relationship between prior years adjustments of financial statements and performance sustainability of the companies listed in Tehran Stock Exchange. Profit margin ratio was used to measure performance sustainability and the difference between reported earnings and restated earnings was used to measure figure restatement value. The statistical sample includes 80 companies, which were members of Tehran Stock Exchange during 2008 - 2012. Simple and multiple regression techniques were used to implement the applied statistical pattern. In this research, we realized that when debit ratio is included in the model as a control variable, a significant relationship is established between absolute value of restatement and performance sustainability so that there is a positive relationship between earnings factor and financial consistency. That is, with the accounting changes increasing, performance sustainability increases, but with the debit ratio increasing, financial performance sustainability decreases.


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