scholarly journals Do Analysts’ Cash Flow Forecasts Improve Firm Value?

2020 ◽  
Vol 8 (4) ◽  
pp. 60
Author(s):  
Hyun Min Oh ◽  
Sam Bock Park ◽  
Jong Hyun Kim
Keyword(s):  
Cash Flow ◽  
Firm Value ◽  
Earnings Quality ◽  
Financial Analysts ◽  
Market Participants ◽  
Economic Decision Making ◽  
Cash Flow Forecasting ◽  
Cash Flow Forecasts ◽  
Positive Effect

We examine whether analysts’ cash flow forecasts improve firm value. First, we analyze whether the joint issuance of financial analysts’ earnings and cash flow forecasts improve firm value. Second, we analyze whether the quality of analysts’ cash flow forecasts improve firm value. The empirical results of our study are as follows. First, the joint issuance of analysts’ earnings and cash flow forecasts has a significantly positive effect on firm value; providing cash flow forecasts reduces information asymmetry and increases earnings quality, thereby increasing corporate value. Second, the quality of analysts’ cash flow forecasts has a significantly positive effect on firm value; the more accurate cash flow forecasts are, the higher firm value is. Our study provides empirical evidence for that the conclusion that cash flow forecasting information produced by financial analysts provides useful information for capital market participants in economic decision making.

scholarly journals Does earnings quality matter? Evidence from the Athens Exchange

2020 ◽  
pp. 93-112
Author(s):  
Ioannis Asimakopoulos ◽  
◽  
Athanasios P. Fassas ◽  
Dimitris Malliaropulos
Keyword(s):  
Corporate Governance ◽  
Firm Value ◽  
Earnings Quality ◽  
Banking System ◽  
Governance Framework ◽  
Market Participants ◽  
Financial Firms ◽  
Specific Factors ◽  
The Right

The relation between accounting earnings and firm valuation has long been a topic of interest to academics and stock market participants. The study analyses the relationship between earnings quality and firm value using a sample of non-financial firms with shares listed on the Athens Exchange over the period 2004-2019. The empirical findings indicate that investors value earnings quality, and this is reflected in a better valuation for firms having earnings of higher quality. The results are robust to different methodologies and controls for firm-specific factors. The evidence is of particular importance for Greek firms seeking to expand their sources of financing beyond the Greek banking system. Such a development requires constant monitoring and strengthening of the corporate governance framework, with the aim of improving the quality of information conveyed by the firms to investors. In this respect, the provisions of Law 4706/2020 regarding the Greek corporate governance framework and the operation of the Hellenic Capital Market Commission seem to be in the right direction.

scholarly journals A Study on the Relationship between Analysts’ Cash Flow Forecasts Issuance and Accounting Information: Evidence from Korea

2019 ◽  
Vol 11 (12) ◽  
pp. 3399 ◽  
Author(s):  
Hyun Min Oh ◽  
Ho young Shin
Keyword(s):  
Cash Flow ◽  
Capital Market ◽  
Forecast Accuracy ◽  
Earnings Forecast ◽  
Financial Analyst ◽  
Market Participants ◽  
Cash Flow Forecasting ◽  
Cash Flow Forecasts ◽  
Cash Flow Forecast ◽  
The Relationship

This study analyzes the relationship between the future cash flow forecast information provided by financial analysts and accounting information. We examine whether the joint issuance of financial analyst earnings forecasts and cash flow forecasts from 2011 to 2015 contributes to the information usefulness of Korean listed firms. The empirical results of this study are as follows. First, the issuance of analysts’ cash flow forecasts and earnings forecast accuracy were significant positive values. Cash flow forecast accuracy and earnings forecast accuracy were significant positive values. Second, the issuance of analysts’ cash flow forecasts and buy–sell bid spread are significant negative values. These results show that the information asymmetry between the manager and the investor can be reduced based on the rich information environment. This study suggests that cash flow forecasting information of financial analysts provides important evidence for capital market participants because it provides evidence that capital market participants’ information can be used as useful information for economic decision-making. These results show the sustainability of a firm from the viewpoint of a financial analyst who acts as an intermediary and external supervisor in the capital market. In addition, the analysts’ cash flow forecasting information is expected to reduce the information asymmetry between the company and the investor, thereby increasing the transparency and sustainability of the firm.

scholarly journals Pengaruh Profitabilitas, Kualitas Laba Dan Keputusan Investasi Terhadap Nilai Perusahaan

2020 ◽  
Vol 2 (4) ◽  
pp. 3828-3839
Author(s):  
Reza Refki Tanggo ◽  
Salma Taqwa
Keyword(s):  
Data Analysis ◽  
Firm Value ◽  
Stock Exchange ◽  
Earnings Quality ◽  
Investment Decisions ◽  
Sampling Technique ◽  
Total Sample ◽  
Manufacturing Companies ◽  
Analysis Method ◽  
Positive Effect

The purpose of this study was to analyze: (1) The effect of profitability on firm value. (2) The effect of earnings quality on firm value. (3) The effect of investment decisions on firm value. The population in this study are all manufacturing companies listed on the Indonesia Stock Exchange (BEI) in 2014-2018. While the sampling technique in this study is using purposive sampling technique with a total sample of 300 samples. The data analysis method used is multiple regression using SPSS 25 software. The results of this study indicate that: (1) profitability has a positive and significant effect on firm value with a significance of 0.000 < 0.05. (2) earnings quality has a positive and insignificant effect on firm value with a significance of 0.757 > 0.05. (3) investment decisions have a positive effect and not on the value of the company with a significance of 0.418 > 0.05

Five-year experience in quality control over cash flow statements in Russian companies

2020 ◽  
Vol 19 (10) ◽  
pp. 1945-1964
Author(s):  
M.A. Alekseev ◽  
M.Yu. Savel'eva ◽  
S.A. Dudin
Keyword(s):  
Quality Control ◽  
Cash Flow ◽  
Financial Analysts ◽  
Cash Flows ◽  
Economic Situation ◽  
Amount Of Information ◽  
Accounting Reports ◽  
Financial Transactions ◽  
Analytical Tools

Subject. The article considers the quality control over cash flow statements. Nowadays, audit procedures apply rather simple analytical tools to assess the reliability of this type of accounting reports. There is, therefore, an objective need to develop them. Objectives. The aim is to assess the quality of cash flow statements for the 5-year period from 2014 till 2018, and prove the interrelation between the scale of manipulation in accounting statements and the economic situation in the country and in the sector. Methods. The study employs theoretical and practical works of foreign and Russian scientists on accounting misstatements. Results. We use a large amount of information to develop and test a methodology for checking the quality of accounting reports, including the assessment of credibility of a statement as a whole, as well as its pats, i.e. cash flows from operations, investments, and financial transactions. Conclusions. It is recommended to use the offered methodology by audit companies and financial analysts to find out companies involved in accounting manipulation.

Misclassifying cash flows from operations: intentional or not?

2014 ◽  
Vol 22 (1) ◽  
pp. 18-32 ◽  
Author(s):  
Karen Lightstone ◽  
Karrilyn Wilcox ◽  
Louis Beaubien
Keyword(s):  
Cash Flow ◽  
Balance Sheet ◽  
Financial Analysts ◽  
Cash Flows ◽  
Free Cash Flow ◽  
Future Research ◽  
Content Type ◽  
Statement Of Cash Flows ◽  
Case Basis

Purpose – The purpose of this paper is to investigate the accuracy and informational quality of the cash from operations section of the cash flow statement. Design/methodology/approach – This paper empirically tested the accuracy of the cash from operations reported by Canadian non-financial companies. The authors studied 262 companies at three different time periods providing 786 firm observations. For each observation, the balance sheet was used to confirm the figures reported in the statement of cash flows. In addition, the authors investigated management's disclosure of the particular working capital items. Findings – The findings suggest that in recent years, companies are more likely to overstate their cash flow from operations, thereby presenting a better financial picture than is supported by the balance sheet accounts. This would suggest that the investing or financing section would be correspondingly understated. The presence of acquisitions reduces overstatements, which may be the result of more auditor presence. Research limitations/implications – This paper extends previous research from documented single, isolated instances of cash from operations being misstated to include a significant sample with more generalizable findings. The data are Canadian which may limit the generalizability to other countries. Future research should address the extent to which financial analysts rely on the reported cash from operations figure. Practical implications – This preliminary study may have implications for financial analysts and others relying on the free cash flow figure. Originality/value – This study expands on previous research which has taken place only on a case-by-case basis.

scholarly journals The Impact Of Cash Flow Information On The Forecasts Provided By Financial Analysts, Considering The Quality Of Earnings

2011 ◽  
Vol 19 (1) ◽  
Author(s):  
Sylvie Deslauriers
Keyword(s):  
Cash Flow ◽  
Financial Analysts ◽  
Font Size ◽  
High Quality ◽  
Future Earnings ◽  
Flow Information ◽  
The Impact

<p class="MsoNormal" style="text-align: justify; margin: 0in 36.1pt 0pt 0.5in; mso-pagination: none;"><span style="font-family: &quot;Times New Roman&quot;,&quot;serif&quot;; font-size: 10pt; mso-bidi-font-style: italic; mso-ansi-language: EN-CA;" lang="EN-CA">In the present study, the impact of publishing more precise and better-structured cash flow information on financial analysts&rsquo; forecast will be examined<span style="color: blue;">.<span style="mso-spacerun: yes;">&nbsp; </span></span>Even though the change in standards presently under study may be principally deemed to be cosmetic, it does appear to have allowed financial analysts to generate more accurate forecasts of future earnings. An increase in the dispersion of these forecasts, more especially when dealing with enterprises providing a high quality of earnings, is also noted. </span></p>

scholarly journals Analyst Dividend Forecasts and Their Usefulness to Investors

2021 ◽  
Author(s):  
Pawel Bilinski ◽  
Mark T. Bradshaw
Keyword(s):  
Cash Flow ◽  
Earnings Quality ◽  
Portfolio Allocation ◽  
Significant Variability ◽  
Dividend Payments ◽  
Cash Flow Forecasts ◽  
Allocation Decisions ◽  
Forward Looking

In contrast to the disappearing dividends view prevalent in the literature, we document extensive dividend payments by firms and significant variability within firms and across 16 countries during 2000-2013. We predict that within-firm variability in dividends increases investor demand for forward-looking dividend information, and analysts respond by producing informative dividend forecasts. We find that analyst dividend forecasts are available for most dividend-paying firms and are more prevalent for firms with higher variability of dividends. Analyst dividend forecasts are more accurate than alternative proxies based on extrapolations of past dividends. Finally, dividend forecasts (i) are incrementally useful to investors beyond information in other fundamentals such as earnings and cash flow forecasts, (ii) help investors interpret earnings quality, and (iii) are associated with investors' portfolio allocation decisions.

The association of analysts’ cash flow forecasts with stock recommendation profitability

2020 ◽  
Vol 28 (2) ◽  
pp. 343-361 ◽  
Author(s):  
Shanshan Pan ◽  
Zhaohui Randall Xu
Keyword(s):  
Cash Flow ◽  
Earnings Quality ◽  
Earnings Forecasts ◽  
Firm Valuation ◽  
Market Demand ◽  
Content Type ◽  
Stock Recommendations ◽  
Stock Recommendation ◽  
Cash Flow Forecasts

Purpose The purpose of this paper is to examine whether analysts’ cash flow forecasts improve the profitability of their stock recommendations and whether the positive effect of cash flow forecasts on analysts’ stock recommendation performance varies with firms’ earnings quality. Design/methodology/approach To test the authors’ predictions, they identify a sample of 161,673 stock recommendations with contemporaneous earnings forecasts and/or cash flow forecasts and regress market-adjusted stock returns on a binary variable that proxies for the issuance of cash flow forecasts while controlling for contemporaneous earnings forecast accuracy, earnings quality, analysts’ forecast experience and capability and certain firm characteristics. The authors’ test results are robust to alternative measures of recommendation profitability, earnings quality and the use of recommendation revisions instead of recommendation levels. Findings The authors find that when analysts issue cash flow forecasts concurrently with earnings forecasts, their stock recommendations lead to higher profitability than when they only issue earnings forecasts, after controlling for analysts’ forecast capability. Moreover, the authors document that the contemporaneous positive relationship between cash flow forecasts and recommendations profitability is stronger for firms with low earnings quality than for firms with high earnings quality. The findings suggest that cash flow forecasts issued by analysts in response to market demand likely play a more important role in firm valuation than cash flow forecasts issued by analysts mainly because of supply-side considerations. Research limitations/implications Future research could build on these findings to conduct further investigation on the alternative incentives for analysts’ forecasts of sales growth and long-term growth rates. Practical implications These findings may also help investors to better assess the quality of analysts’ research outputs and to identify superior stock recommendations. Originality/value This study provides insight into the role of cash flow forecasts in firm valuation and adds fresh evidence to the debate on the usefulness of cash flow forecasts. It extends the stream of research on the characteristics of analyst forecasts and increases our knowledge about the role of analysts in the financial market.

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