*Corresponding author. E-mail addresses: dr.ghodrati42@yahoo.com (H. Ghodrati) © 2014 Growing Science Ltd. All rights reserved. doi: 10.5267/j.msl.2014.6.003 Management Science Letters 4 (2014) 1551–1558 Contents lists available at GrowingScience Management Science Letters homepage: www.GrowingScience.com/msl A study on the relationship between operational cash flow and the return of stockholders Hassan Ghodrati a* and Hassan Abyak b a Assist. Prof. & Faculty Member, Department of Management & Accounting, Kashan Branch, Islamic Azad University, Kashan, Iran b Sama Technical and Vocational Training College, Islamic Azad University, Ayatollah Amoli Branch, Amol, Iran C H R O N I C L E A B S T R A C T Article history: Received January 4, 2014 Accepted 28 May 2014 Available online June 1 2014 Performance measurement in managerial accounting is normally associated with cash flow and it is executed based on different figures such as testing information content abuse and accounting figures. However, increasing the information content in accrual components of earning and internal performance measurement provides additional informative insights. This paper studies the relationship between operating cash flows and earnings along with total shareholder returns. The study chooses the information of 54 firms from Tehran Stock Exchange. The results show that there were some meaningful relationship between the operating cash flow, profitability and the returns of all stakeholders. However, this happens by increasing profitability and cash flow of information asymmetry proportion to their correlation with the economic efficiency of shareholders’ returns. © 2014 Growing Science Ltd. All rights reserved. Keywords: Accounting Figures Performance Criteria Total Shareholder Return 1. Introduction These days, corporations offer many products and services and the ownership of these business owners belongs to literally thousands of shareholders. To control such giant firms, a group of people called board of director manages the ongoing business and makes decisions. This transformation created a new group of professional managers who normally do not own any shares of the firms. Therefore, management of most corporations is separated from the shareholders (Shabahang and Hassan Ghorban, 1998). Separation of management from ownership may create conflict of interest between managers and shareholders and the emergence of the representation theory issue. From an economical perspective, assuming rational behavior of people, they first look after maximizing their interests and managers also are not exempt from this rule. Managers are interested in presenting favorable picture of the financial position of the business unit to shareholders and other interested parties along with maximizing its own interests, welfare and strengthen their job positions. However, in some cases, necessarily raising the capital of managers is not in line with raising the capital of