The impact of earning quality metrics on the financial sustainability of companies in the basic metals industry: panel data approach

Articles in Press

Document Type : Original Article

Authors

matin arbabi ¹

ali cheshomi ²

¹ M.Sc. Student in Financial Engineering and Risk Management, Department of Financial Management, Mashhad Branch, Islamic Azad University, Mashhad, Iran.

² Ferdowsi University of Mashhad

https://doi.org/10.22067/mfe.2026.96436.1637

Abstract

The main objective of this study is to examine the relationship between abnormal accruals,
earnings smoothness, earnings persistence, and earnings predictability as measures of earnings
quality and the financial sustainability of companies operating in the basic metals industry. In
this research, panel data and multiple regression analysis were employed using EViews 13
software to test the study’s hypotheses. In addition, the study incorporates a comprehensive
quantitative approach to ensure the robustness and reliability of the obtained results. The data
analysis was conducted on 30 listed metal companies in the Iranian capital market over a 13-year
period from 2011 to 2023 (1390–1402), aiming to precisely investigate potential relationships
among the variables. Furthermore, special attention was given to the consistency of results across
different estimation techniques and model specifications.
The results of the analysis indicate a significant negative relationship between financial
sustainability and abnormal accruals. Moreover, there is a significant but negative relationship
between financial sustainability (as the dependent variable) and both earnings persistence and
earnings predictability. However, no significant relationship was found between financial
sustainability and earnings smoothness.

Keywords

Accruals

earning smoothly

earnings predictability

Subjects

• Financial Economics

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