An Analysis of the Predictive Ability of Direct Cash Flow Information Under IFRS

2013 ◽  
Author(s):  
Alan J. Duboisse de Ricquebourg ◽  
Iain Clacher
Keyword(s):  
Cash Flow ◽  
Predictive Ability ◽  
Flow Information

The Predictive Ability of Direct Method Cash Flow Information

2000 ◽  
Vol 27 (1-2) ◽  
pp. 215-245 ◽  
Author(s):  
Gopal V. Krishnan ◽  
James A. Largay III
Keyword(s):  
Cash Flow ◽  
Direct Method ◽  
Predictive Ability ◽  
Flow Information

Disclosure of Cash Flow Information in Earnings Announcements

2012 ◽  
Author(s):  
Bin Miao ◽  
Zinan Zhu
Keyword(s):  
Cash Flow ◽  
Earnings Announcements ◽  
Flow Information

scholarly journals Foreign Monitoring and Predictability of Future Cash Flow

2019 ◽  
Vol 11 (18) ◽  
pp. 4832
Author(s):  
Jaehong Lee ◽  
Eunsoo Kim
Keyword(s):  
Cash Flow ◽  
Stock Exchange ◽  
Predictive Ability ◽  
Financial Statements ◽  
Cash Flows ◽  
Foreign Investors ◽  
Future Cash Flow ◽  
Flow Components ◽  
Future Cash Flows

A company’s sustainability is generally determined by whether it is able to create a positive long-term cash flow. This paper investigates whether the predictive ability of cash flows and earnings in forecasting future cash flows differs depending on the foreign investors’ ownership. Based on firms listed in the Korea Stock Exchange market from 2000 to 2017, we find that earnings and cash flow components of financial statements enhance the predictability of future cash flow in the Korean stock market. Conversely, foreign investors showed a tendency to decide on investments based on operating cash flow instead of earnings when predicting future cash flow. These findings indicate that reliability towards earnings may fall since foreign investors’ concerns are on the prospects of earnings management. These results were strengthened by the addition of several more analyses including cluster analyses, consideration of information asymmetry and the chaebol governance.

Investor Response to Cash Flow Information

1998 ◽  
Vol 25 (5&6) ◽  
pp. 613-630 ◽  
Author(s):  
Neil Garrod
Keyword(s):  
Cash Flow ◽  
Flow Information

scholarly journals The usefulness of operating cash flow information: Does format matter?

2012 ◽  
Vol 10 (1) ◽  
pp. 44-52 ◽  
Author(s):  
Shadi Farshadfar
Keyword(s):  
Cash Flow ◽  
Indirect Method ◽  
Direct Method ◽  
Cash Flows ◽  
Indirect Methods ◽  
Flow Information ◽  
Operating Cash Flow ◽  
Future Cash Flows ◽  
Direct And Indirect Methods ◽  
Level Analysis

This study investigates whether the direct method of presenting cash flows from operations is superior to the indirect method in its ability to forecast future cash flows. It also considers the effect of industry characteristics on the relative usefulness of direct and indirect methods of cash flow presentation. The study, which uses a sample of Australian firms, finds that both the direct and indirect methods improve the forecast of future cash flows. However, the indirect method of reporting cash flows from operations is more relevant than the direct method in predicting future cash flows. Evidence from the industry-level analysis overall reinforces the main results.

scholarly journals The FASBs Concepts Statement On Cash Flows And Present Value

2011 ◽  
Vol 19 (4) ◽  
Author(s):  
Stanley Martens ◽  
Thomas Berry
Keyword(s):  
Cash Flow ◽  
Accounting Standards ◽  
Fair Value ◽  
Cash Flows ◽  
Financial Accounting ◽  
Financial Accounting Standards Board ◽  
Present Value ◽  
Numerical Examples ◽  
Flow Information

In February 2000, the Financial Accounting Standards Board (FASB) issued Statement of Financial Accounting Concepts No. 7, Using Cash Flow Information and Present Value in Accounting Measurements.  In this document the FASB asserts without proof that a present value computation along its lines will provide a good estimate of the fair value of an asset or liability.  Using numerical examples provided by the FASB, we attempt to construct arguments in support of the FASB’s claim.  We find that such arguments require strong and not at all obvious assumptions about players in hypothetical markets.

scholarly journals Classification of bankruptcy with cash flow information: Evidence from small size firms

2016 ◽  
Vol 12 (2) ◽  
pp. 86-95
Author(s):  
Lious Ntoung Agbor Tabot ◽  
Helena Maria Santos de Oliveira ◽  
Cláudia M. F. Pereira
Keyword(s):  
Cash Flow ◽  
Cash Flows ◽  
Financial Ratios ◽  
Corporate Failure ◽  
Dividend Payments ◽  
Fixed Charges ◽  
Flow Information ◽  
Study Test ◽  
Flow Components

Corporate financial ratios have been debated in the past as the most importance measures in predicting corporate failure, yet gaps remain in the literature about cash flow information in classifying between bankrupted and non-bankrupted firms. This study test whether cash flow components is more useful in classifying bankrupted and non-bankrupted of small and unlisted firms in Spain. The results of this study suggest that cash flows components are superior to financial ratios for classifying small failed and non-failed companies with the logit model. Particularly, most failing firms, reduce or avoid paying dividend to their owner. This reduction or the absence of dividend payments as a proportion of total outflow is often related to either a significant decrease in the net operating inflow and/or an increase in the relative outflow to fixed charges resulting from increased external debt financing.

Voluntary Disclosure of Balance Sheet and Cash Flow Information Around Restatements

2016 ◽  
Author(s):  
Kai Chen ◽  
Darren Henderson ◽  
Christine I. Wiedman
Keyword(s):  
Cash Flow ◽  
Voluntary Disclosure ◽  
Balance Sheet ◽  
Flow Information

Voluntary Disclosure of Disaggregated Balance Sheet and Cash Flow Information Around Restatements

2021 ◽  
Author(s):  
Kai Chen ◽  
Darren Henderson ◽  
Christine I Wiedman
Keyword(s):  
Cash Flow ◽  
Voluntary Disclosure ◽  
Balance Sheet ◽  
Reporting Quality ◽  
Information Uncertainty ◽  
Earnings Response Coefficients ◽  
Earnings Response ◽  
Earnings Releases ◽  
Flow Information ◽  
The Impact

We examine changes in voluntary disclosure of balance sheet and cash flow (BS/CF) information in earnings releases after restatement announcements. We consider these disclosures to be particularly relevant in the restatement context since they help investors interpret accruals and assess reporting quality at a time when information uncertainty is high. We find that BS/CF disclosures drop significantly for at least five quarters following restatement announcements, particularly for severe restatements and those restatements more likely to lead to litigation, and less for firms likely to benefit from reputation-repairing activities. We next consider the impact of BS/CF changes on earnings informativeness and find significantly lower post-restatement earnings response coefficients for firms ceasing BS/CF disclosure, but not otherwise. Overall, we argue that litigation concerns provide a strong disincentive for disclosure following restatement announcements. Our findings add to a growing literature on the importance of disaggregated BS/CF information in interpreting accruals.

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