Earnings growth sustainability is an important aspect of earnings quality that is very vital for users of financial statements at their financial analysis and decisions, this study aimed to investigate the earnings persistence and related economic consequences in the two economically different environments of Iran a developing country and New Zealand a developed country. Earnings quality is affected by several factors that identifying their effect on earnings quality would be useful in developing better models of earnings quality. In the current empirical research study, determinants of earnings quality have been investigated comprehensively from four dimensions including firm characteristics, business characteristics, economic characteristics, and audit quality. To examine the economic consequence of earnings quality, three variables including the industry-adjusted price-earnings- ratio, industry-adjusted price- book-ratio, and Tobin’s Q ratio have been used. This research recruited 135 companies listed on the Tehran Stock Exchange and 38 companies listed on the New Zealand Stock Exchange the investigation period is considered 2006 to 2014. In this study, the exploratory approach has been used to investigate which of the earnings quality determinants have a significant effect on earnings quality. The findings reveal the low earnings persistence of both Iranian and New Zealand companies. Among the earnings quality determinants intangible intensity, leverage, and standard deviation of operating cash flow had a significant relationship with earnings persistence. The results on the economic consequence of earnings quality showed that earnings persistence is only significantly related to Tobin’s Q ratio.
