Determinants and usefulness of analysts' cash flow forecasts: evidence from Australia

Kamran Ahmed and Muhammad Jahangir Ali

International Journal of Accounting & Information Management, 2013, vol. 21, issue 1, 4-21

Abstract: Purpose - The purpose of this paper is to examine the determinants of analysts' operating cash flow forecasts of Australian listed firms and whether or not such forecasts improve the usefulness of earnings and predictive ability of current cash flows. Design/methodology/approach - The authors used a large sample of firms for which both cash flows and earnings forecasts were available over a period between 1993 and 2003, and employed both univariate and logistic regression analyses. Findings - It was found that analysts forecast both operating cash flows and earnings when the firms are more complex in operations and when the size of the firm is relatively small. Further, it was found that cash flow forecasts improve the usefulness of earnings and predictive ability of current cash flows. Originality/value - This study contributes to current understanding of analysts' forecast behaviour regarding dissemination of operating cash flow information and usefulness of cash flow forecasts.

Keywords: Cash flow; Earnings; Financial forecasting; Cash flow forecasts; Earnings forecasts; Analysts' forecasts; Usefulness of earnings; Predictive ability of operating cash flows (search for similar items in EconPapers)
Date: 2013
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Persistent link: https://EconPapers.repec.org/RePEc:eme:ijaimp:v:21:y:2013:i:1:p:4-21

DOI: 10.1108/18347641311299722

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