The Impact of Accruals and Free Cash Flow on Financial Stability Using Genetic Algorithm

Articles in Press

Document Type : Original Article

Authors

1 Ph.D Student, Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran.

2 Associate Professor,department of Accounting,, Islamic Azad University,,South Tehran Branch, Tehran,Iran

3 Assistant Professor Department of Accounting, South Tehran Branch, Islamic Azad University, Tehran, Iran

10.22034/iaas.2023.385286.1429

Abstract

Accruals are one of the most important and effective parts of profit, examining these items along with free cash flow in estimating financial stability and performance review is of great importance and reduces the uncertainty of users and beneficiaries of financial information. The aim of the upcoming research is to determine the effect of adjusting the Jones model discretionary and nondiscretionary accruals and also free cash flow on financial stability. The statistical population of the research included all insurance companies and its time period was between 2015 and 2021. The research method is applied in terms of purpose and descriptive in terms of nature and content. Hypotheses testing has been done using correlation between variables and two regression approaches and genetic meta-heuristic algorithm. The results obtained from the test of research hypotheses showed that the variables of discretionary and nondiscretionary accrual items and free cash flow have a significant effect on financial stability. Also, the results showed that the estimation of financial stability using genetic algorithm is accurate from multivariate regression.

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Main Subjects

Accounting and Auditing Studies

Articles in Press, Accepted Manuscript
Available Online from 18 September 2023

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