Are analysts’ earnings forecasts more accurate when accompanied by cash flow forecasts?

Call, Andrew C.; Chen, Shuping; Tong, Yen H.

doi:10.1007/s11142-009-9086-7

Cited by 163 publications

(246 citation statements)

References 53 publications

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“…It is in the same context, as Call et al (2009) showed that forecasts of accounting earnings published by financial analysts are more accurate when accompanied by those of the operating cash flows. Also, they add that financial analysts seem understand better the time series properties of accounting income and its components, when they jointly forecast the earnings and cash flows.…”

Section: Introductionmentioning

confidence: 86%

The Examination of the Ability of Earnings and Cash Flow in Predicting Future Cash Flows: Application to the Tunisian Context

Jemaa¹,

Toukabri²,

Jilani³

2014

AFR

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This research aims to test the ability of accounting earnings versus cash flows to predict future cash flows in the Tunisian context. The study sample consists of 37 companies listed on the Tunisian financial market for the period 1998-2012. In this study, we provide evidence of the ability of accounting earnings and cash flows to predict cash flow for one and two subsequent years. The results show that for simple models whose variables of prediction is one or two years of delay, it is the operating cash flows that have the most interesting predictive capacity. However, for multi-year models, accounting earnings is most relevant in terms of predictive power of future cash flows.

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Section: Introductionmentioning

confidence: 86%

The Examination of the Ability of Earnings and Cash Flow in Predicting Future Cash Flows: Application to the Tunisian Context

Jemaa¹,

Toukabri²,

Jilani³

2014

AFR

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“…The presence of an analyst's cash flow forecast indicates the perceived importance of OCF and the commensurate scrutiny of reported OCF (DeFond and Hung 2003;Call et al 2009). Evidence also suggests that analysts' cash flow forecasts create capital market incentives to report higher OCF (DeFond and Hung 2003;Brown et al 2013;Call et al 2013).…”

Section: Motivation and Research Design 21 Determinants Of Ocf Classmentioning

confidence: 99%

Flexibility in Cash Flow Classification Under IFRS: Determinants and Consequences

Gordon

Henry

Jørgensen³

et al. 2016

SSRN Journal

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“…6 Relatively unknown analysts looking to establish a reputation would welcome the exposure I/B/E/S provides. 4 An alternative disaggregation of earnings is cash flows and accruals (Call et al 2009). While important in its own right, we do not use this disaggregation because analysts tend to supply cash flow forecasts to I/B/E/S when earnings are uninformative (DeFond and Hung 2003).…”

Section: Economic Determinants Of the Supply Of Disaggregated Earningmentioning

confidence: 99%

Analyst reputation and the issuance of disaggregated earnings forecasts to I/B/E/S

2009

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Although sell-side analysts privately forecast revenues and expenses when producing earnings forecasts, not all analysts choose to provide I/B/E/S with earnings forecasts disaggregated into revenues and expenses. We investigate the role of reputation in explaining this decision. We find that analysts without established reputations are more likely than reputable analysts to issue disaggregated earnings forecasts to I/B/E/S, consistent with I/B/E/S exposure benefits accruing to analysts seeking to establish a reputation. Among less reputable analysts, those with high ability are more likely to disaggregate, consistent with this group reaping greater benefits from the exposure I/B/E/S provides. Additional tests support our primary hypotheses. Among less reputable analysts, those who disaggregate are more (less) likely to be promoted (demoted or terminated). The stock market responds similarly, with more weight assigned to earnings forecast revisions provided by analysts who disaggregate their earnings forecasts.

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Are analysts’ earnings forecasts more accurate when accompanied by cash flow forecasts?

Cited by 163 publications

References 53 publications

The Examination of the Ability of Earnings and Cash Flow in Predicting Future Cash Flows: Application to the Tunisian Context

The Examination of the Ability of Earnings and Cash Flow in Predicting Future Cash Flows: Application to the Tunisian Context

Flexibility in Cash Flow Classification Under IFRS: Determinants and Consequences

Analyst reputation and the issuance of disaggregated earnings forecasts to I/B/E/S

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