We examine the role of cash flow from operations (CFO) in chief executive officer (CEO) cash compensation. We predict that CFO is contract-relevant in the presence of earnings, and more so when (1) the quality of earnings relative to the quality of CFO as a measure of performance is low and (2) the need for CFO as a financing source is high. Our analysis is motivated principally by normative arguments and anecdotes from financial disclosures linking CFO to managerial effort and contracts, notwithstanding the traditional role of earnings in performance measurement. We find that the weight of CFO in the compensation model is positive and significant in the presence of earnings and stock returns. We also find that the relative quality of CFO compared with that of earnings has a positive (negative) impact on the weight of CFO (earnings). We further find that the relative weight of CFO is enhanced substantially when enterprise activities crucially depend on internally generated cash flow. These findings are unaltered when we include CEO age, firm size, and risk in the model and allow the coefficients to vary across industries. KeywordsCash flow from operations; Compensation; Earnings JEL Descriptors J3, L2, M41 L'information comptable et la rémunération des chefs de la direction : Le rôle des flux de trésorerie d'exploitation en présence de bénéfices CondenséLes mesures comptables de la performance sont depuis longtemps utilisées dans les contrats de gestion (voir Pavlik, Scott et Tiessen, 1993, pour une recension des publications sur le sujet). Une mesure comptable de la performance est censée être pertinente à cet égard si elle * Accepted by Michel Magnan. We gratefully acknowledge insightful comments and suggestions by Michel Magnan (associate editor), and two anonymous reviewers. We also benefited from comments

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This study examines the association between XBRL extensions and financial information environments of firms, where “financial information environment” refers to the degree to which a firm's financial information is reflected in the information held/used by investors. An XBRL extension is a customized definition of a financial concept or reporting situation that is not available in the U.S. GAAP Financial Reporting Taxonomy. In 2009, the U.S. Securities and Exchange Commission (SEC) allowed firms to begin to use extensions to add new concepts in their financial disclosures. Critics express concerns that the reporting discretion permitted under the XBRL mandate will reduce comparability of financial disclosures and complicate financial analysis. Proponents contend that XBRL extensions will provide users with new and relevant information. To evaluate the competing views, we employ several proxies for financial information environment and perform analyses for early and later phases of XBRL adoption. We find that XBRL extensions are negatively (positively) associated with financial information environments of firms at the early (later) phases of XBRL adoption. The results for later periods of XBRL adoption provide support for the SEC's policy that allows registrants to use XBRL extensions to increase users' understanding of the information in financial statements.

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SYNOPSIS This paper examines the impact of abnormal extensions in eXtensible Business Reporting Language (XBRL) on analysts' forecasting behavior in the U.S. In this analysis, abnormal extensions reflect XBRL extensions that exceed the expected level for industry peers. In 2009 the Securities and Exchange Commission (SEC) permitted U.S. registrants to use the extensions to provide greater details about transactions and events unique to their reporting circumstances. Critics argue that the reporting discretion permitted under the mandate will complicate and impede financial analysis. The SEC and proponents contend that the extensions improve registrants' financial information environment and facilitate financial analysis. Our findings are that abnormal extensions are positively associated with the number of analysts who follow the firm and forecast accuracy, but negatively associated with forecast dispersion. The results are weaker during the first year and stronger during later years of the XBRL-based reporting. Moreover, the effect of the abnormal extensions on the forecasting variables is greater for filers with many business segments and/or harder-to-read financial statements. Our findings provide strong support for the SEC's policy that allows registrants to create extensions as a means of enhancing the quality and interpretation of financial disclosures.