The Predictive Ability of Quarterly Financial Statements

Hui Zhou, Worapree Ole Maneesoonthorn and Xiangjin Bruce Chen
Additional contact information
Hui Zhou: Faculty of Business and Economics, University of Auckland Business School, Auckland 1142, New Zealand
Worapree Ole Maneesoonthorn: Melbourne Business School, University of Melbourne, Melbourne, VIC 3053, Australia
Xiangjin Bruce Chen: Independent Researcher, Melbourne, VIC 3000, Australia

IJFS, 2021, vol. 9, issue 3, 1-18

Abstract: A fundamental role of financial reporting is to provide information useful in forecasting future cash flows. Applying up-to-date time series modelling techniques, this study provides direct evidence on the usefulness of quarterly data in predicting future operating cash flows. Moreover, we show that the predictive gain from using quarterly data is larger for asset-heavy industries and industries with higher levels of earnings smoothness. This study contributes to the accounting literature by examining the usefulness of quarterly financial statements in predicting the realization of future cash flows. Our results help fill the gap in knowledge on quarterly financial statements and provide new insights on why the frequency of financial reporting matters. In addition, our findings have important policy implications for the ongoing debate over interim reporting requirements in multiple jurisdictions around the world.

Keywords: capital market information environment; cash flow forecasting; financial reporting frequency (search for similar items in EconPapers)
JEL-codes: F2 F3 F41 F42 G1 G2 G3 (search for similar items in EconPapers)
Date: 2021
References: View references in EconPapers View complete reference list from CitEc
Citations:

Downloads: (external link)
https://www.mdpi.com/2227-7072/9/3/50/pdf (application/pdf)
https://www.mdpi.com/2227-7072/9/3/50/ (text/html)

Related works:
This item may be available elsewhere in EconPapers: Search for items with the same title.

Export reference: BibTeX RIS (EndNote, ProCite, RefMan) HTML/Text

Persistent link: https://EconPapers.repec.org/RePEc:gam:jijfss:v:9:y:2021:i:3:p:50-:d:635744

Access Statistics for this article

IJFS is currently edited by Ms. Hannah Lu

More articles in IJFS from MDPI
Bibliographic data for series maintained by MDPI Indexing Manager ().