The effects of operating cash flow disclosure on earnings comparability, analysts' forecasts, and firms’ investment decisions during the Pre-IFRS era

Maria T. Caban-Garcia, Heeick Choi and Myungsun Kim

The British Accounting Review, 2020, vol. 52, issue 4

Abstract: We examine the effects of the availability of operating cash flow (OCF) information disclosed by firms operating in 15 international countries during the pre-IFRS era on: (1) the comparability of these firms' disaggregated earnings to those of U.S. firms for equity valuation purposes, (2) the properties of analysts' earnings forecasts, and (3) the efficiency of firms' investment decisions. We find that the comparability of disaggregated earnings improves after company-disclosed OCF information is available. We also find decreases in analysts' forecast errors and dispersion and a decrease in firms’ tendency to over- or under-invest when they are predisposed to do so.

Keywords: Earnings comparability; Disaggregated earnings; Cash flow statement; Properties of analysts' earnings forecasts; Investment efficiency (search for similar items in EconPapers)
JEL-codes: G15 M41 (search for similar items in EconPapers)
Date: 2020
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Citations: View citations in EconPapers (3)

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Persistent link: https://EconPapers.repec.org/RePEc:eee:bracre:v:52:y:2020:i:4:s0890838920300032

DOI: 10.1016/j.bar.2020.100883

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