Return on Assets Ratio and Its Relationship with Stock Prices of Companies in Tehran Stock Exchange

Accounting profit and its components, including information when deciding which individuals are considered. Investors are searching their own interests in favor of information. Accounting profit is a sign that investors change the beliefs and behavior. Evidence has shown that Accounting profit a good indicator of stock returns and expected future cash flows, but due to the limitations of conservatism and importance in the determination of Accounting profit, some analysts concluded that the economic benefit of the Accounting profit better indicator of expected future cash flows. The aim of this study was to investigate the relationship between return on equity and stock prices in companies of Tehran Stock Exchange. In order to achieve the objectives of the study data 60 listed companies in the Tehran Stock Exchange over a period of 8 years (2005 to 2013). To investigate the relationships between variables from the regression analysis is used. Based on our results, it can be concluded that the optimal ratio of return on equity, stock prices in the stock market will be in good condition.