Investigation of Rational Pricing of Cash and Accruals Components the Earnings Considering the Moderating Effect of Conservatism

   Abstract Accounting earning and its components are the most important accounting items in stock pricing.  If investors do not achieve abnormal returns using this information, the capital market is said to have acted efficiently in reflecting accounting earning information in stock pricing. In other words, pricing stocks is rational. The purpose of this study is to investigate the market response to accounting earning components in stock pricing considering the moderating effect of conservatism. Our population includes listed companies in Tehran Stock Exchange for the period 1389- 1397. We analyzed the sample of 111 companies. In order to test the hypotheses, nonlinear regression analysis using simultaneous equation system and Mishkin (1983) test were used. The research findings indicate the rationality of stock pricing using accounting earning  components and considering the moderating effect of   conservatism. In other words, the capital market is effective in assessing the impact of conservatism on the ability of cash and accrual components of earnings to forecast one-year- ahead earnings.