Do Analysts’ Cash Flow Forecasts Improve Firm Value?

Hyun Min Oh, Sam Bock Park and Jong Hyun Kim
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Hyun Min Oh: Department of Accounting, College of Social Sciences, Sunchon National University, 255 Jungang-ro, Suncheon, Jeonnam 57922, Korea
Sam Bock Park: Department of Accounting, College of Commerce, Jeonbuk National University, 567 Baekje-daero, Deokjin-gu, Jeonju-si, Jeollabuk-do 54896, Korea
Jong Hyun Kim: Department of Accounting and Tax, College of Business and Economics, Hanyang University, Gyeonggi-do 15588, Korea

IJFS, 2020, vol. 8, issue 4, 1-25

Abstract: 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.

Keywords: analysts’ cash flow forecasts; analysts’ earnings forecasts; firm value (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2020
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