In this article we investigated the role of accruals in interpreting earnings quality in Tehran Stock Exchange (TSE), and the relation between earnings quality based on accruals and it's components with normal and abnormal returns By using data from TSE over period 1377-1384(Iranian calendar) . We separated accruals in discretionary and nondiscretionary items.
In order to obtain the relation between earnings quality and stock returns six hypotheses have been analyzed. We suggest that stock returns affected by extent of accruals and its components. Furthermore stock returns of companies with high accruals and low accruals have been related together significantly.
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