The effect of operational cycle on persistence of income accruals

The purpose of this research is to analyze the effect of the companie's operating cycle on the stability of their accruals and also the stability of the accrual and cash components of earning in which the ability of clarifying the future profits is the criterion for the stability of the accrual and cash components of earning. In this research 83 companies within a period of five years from 1384 to 1388(solar calendar) have been analyzed in order to study and improve the effective factors on the stability of the accruals of earning. This analysis has been done according to Q. Hao's (2009) model and after that, for comparison, the stability of the accruals within each part have been studied according to Sloan 's (1996) model. The results showed that in Iran there is no meaningful relation between the length of the operating cycle and the stability of the accruals, and we cannot confirm that the companies which have a longer operating cycle have more instability in their accruals and also the results proved that the accrual components, of earning have less stability than the cash components, thus the cash components of earning have more ability to predict the future earnings, and thus the more cash components the more stable the earning will be.