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

Jemaa, Olfa Ben; Toukabri, Mohamed; Jilani, Faouzi

doi:10.5430/afr.v4n1p1

Cited by 15 publications

(15 citation statements)

References 22 publications

(23 reference statements)

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“…So, the researcher therefore accepts the second hypothesis that states that cur- rent earnings have significant ability predictive ability for future operating cash flows. This finding is consistent with findings of studies such as Greenberg et al (1986); Jordan and Waldron(2010); Ebaid (2011) and Jemaa et al (2015).…”

Section: Hypotheses Testingsupporting

confidence: 93%

“…This finding is consistent with results of studies such as ; Lorek and Willinger (1996); Quirin et al (1999); Al-Debie (2011) and Efayena (2015). However this finding is inconsistent with the findings such as Greenberg et al (1986); Jordan and Waldron(2010); Ebaid (2011) and Jemaa et al (2015).…”

Section: Hypotheses Testingcontrasting

confidence: 84%

“…Call(2008) also showed that the extraordinary cash flows significantly decrease during the year following the issuance of financial analysts' forecasts of cash flows. Jemaa et al( 2015) showed that financial analysts make a prediction of the cash flows of companies whose earnings fluctuate .…”

Section: -Literature Review and Hypotheses Developmentmentioning

confidence: 99%

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الأرباح مقابل التدفقات النقدیة فی التنبؤ بالتدفقات النقدیة المستقبلیة دلیل من الشرکات المصریة والسعودیة(باللغة الإنجلیزیة)

الشرقاوي¹

2021

مجلة الاسکندریة للبحوث المحاسبیة

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This study examines the role of accrual based earnings derived from accrual accounting basis in comparison with cash flows in the prediction of future operating cash flows of quoted non-financial companies in Egypt and Saudi Arabia . Using a sample of 55 Egyptian companies and 35 Saudi companies over a period of 5 years (2015 -2019) and employing the OLS regression analysis, the results suggest that both earnings and cash flows have predictive ability in predicting future operating cash flows in both countries. However,the results show that cash flows are a better predictor of future operating cash flows than earnings in both countries. Our study findings are in contrast to the assertion of Financial Accounting Standards Board (FASB) and International Accounting Standards Board (IASB) that earnings are a better predictor of future cash flows.

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Section: Hypotheses Testingsupporting

confidence: 93%

Section: Hypotheses Testingcontrasting

confidence: 84%

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الأرباح مقابل التدفقات النقدیة فی التنبؤ بالتدفقات النقدیة المستقبلیة دلیل من الشرکات المصریة والسعودیة(باللغة الإنجلیزیة)

الشرقاوي¹

2021

مجلة الاسکندریة للبحوث المحاسبیة

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“…It is also essential to reinvest free cash flows. Jemaa et al (2014) worked on prediction of future cash flows in Tunisian context and preferred operating cash flows over earnings. Whereas, disaggregated accruals were found with better predictabilities in the studies of (Mulenga and Bhatia, 2017) and similar findings generated in the context of Saudi Arabia (Senan, 2019).…”

Section: Future Cash Flows Prediction In Developing and Emerging Economiesmentioning

confidence: 99%

Accruals in the Prediction of Forthcoming Cash Flows in the Companies Listed at Pakistan Stock Exchange

Hussain¹,

Abidin²,

Ibrahim³

et al. 2020

IJEFI

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This research founds the relative predictabilities of accruals and further disaggregated accruals-trading accruals, non-trading accruals, and financial accruals in the estimation of future cash flows. The research also examines the effect of the global financial crisis on this association between accruals and future cash flow prediction. The research uses annual data from the period of 1999 to 2018 from 453 firms, which includes 9060 observations. The whole sample period covers data from 1999 to 2018, during the financial crisis period from 2008 to 2009 and Pre financial crisis period from 1999 to 2007 and Post global financial crisis period 2010 to 2018. To examine the relationship between accruals, disaggregated accruals, and estimation of future cash flows, hypotheses were developed and seasoned through OLS. The outcomes confirm that financial accruals, non-trading accruals, and total aggregated accruals were significant, but trading accruals was not a significant contributor to the estimation of future cash flows. Moreover, there was no significant effect of the global financial crisis on the relationship among disaggregated accruals and forecast of imminent cash flows during Pre and Post and during the global financial crisis period.

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“…Agency theory bases its foundation on conflict of interest between investors and stakeholders, in that managers act to exploit their own personal interests. Whereas, stakeholders act in a rational way to maximize their personal utility [28].…”

Section: Agency Theorymentioning

confidence: 99%

Earning Management: From Agency and Signalling Theory Perspective in Ethiopia

Yimenu

Surur

2019

JEMT

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Aims: To examine earning management from agency and signalling theory perspectives. Agency theory was used as a clogging factor for earning management practice whereas, signalling theory relates to managements intention to reflect insider information for the market. Study Design: Considering the nature of the problem, explanatory research design with mixed research approach was employed. Place and Duration of Study: Sample: large manufacturing companies from the period of 2009 to 2017, Addis Ababa, Ethiopia. Methodology: The study used audited financial reports of 14 large manufacturing companies in Addis Ababa operating from the period of 2009 to 2017 for which random effect regression model was used. Results: From agency theory proxies, leverage and audit quality had significant positive and negative impact respectively on earning management. The finding for signalling theory proxies showed that, size of the firm had a positive significant relationship with earning management. Conclusion: The study concluded that signalling and agency theories partially explained earning management in Ethiopian Large Manufacturing Share companies. Originality/value: There were numerous studies explaining earning management from signalling and Agency theory self-reliantly, but this study has modeled earning maneuver motives of management (signalling motive) and controlling mechanisms (Agency theory proxies) set by stakeholders, in one model. Further, the study was conducted in developing country perspective with lower legal requirement on information asymmetry, higher reporting laxity and non-standard/mixed reporting experience.

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

Cited by 15 publications

References 22 publications

الأرباح مقابل التدفقات النقدیة فی التنبؤ بالتدفقات النقدیة المستقبلیة دلیل من الشرکات المصریة والسعودیة(باللغة الإنجلیزیة)

الأرباح مقابل التدفقات النقدیة فی التنبؤ بالتدفقات النقدیة المستقبلیة دلیل من الشرکات المصریة والسعودیة(باللغة الإنجلیزیة)

Accruals in the Prediction of Forthcoming Cash Flows in the Companies Listed at Pakistan Stock Exchange

Earning Management: From Agency and Signalling Theory Perspective in Ethiopia

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