2012
DOI: 10.5539/ijbm.v7n2p45
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The Reliability of Accruals and the Prediction of Future Cash Flow

Abstract: The aim of this study is to investigate the reliability of accruals in predicting cash flows. Three categories of accrual are considered (trading, non-trading and financial accruals), which are calculated on the basis of the balance sheet information available in the Worldscope database. Different levels of reliability are assigned to the different types of accrual dependent on their expected propensity to manipulation, using a three-point scale of reliability (low, medium and high). We expect a higher degree … Show more

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Cited by 4 publications
(23 citation statements)
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“…Farshadfar and Monem (2019) investigated the predictive abilities of accruals -working, non-current operating accruals and financial accruals and future operating cash flows using Australian firms. The findings of the study contradicted with many prior studies (such as Khansalar, 2012;Khansalar and Namazi, 2017) as working capital and noncurrent operating accruals found better predictor than financial accruals in UK.…”
Section: Future Cash Flows Prediction In Developed Countriescontrasting
confidence: 99%
See 4 more Smart Citations
“…Farshadfar and Monem (2019) investigated the predictive abilities of accruals -working, non-current operating accruals and financial accruals and future operating cash flows using Australian firms. The findings of the study contradicted with many prior studies (such as Khansalar, 2012;Khansalar and Namazi, 2017) as working capital and noncurrent operating accruals found better predictor than financial accruals in UK.…”
Section: Future Cash Flows Prediction In Developed Countriescontrasting
confidence: 99%
“…Earning is superior forecaster than past cash flows from operations in the estimation of forthcoming cash flows and also increases the accuracy of future cash flow forecasting (Hribar and Yehuda, 2015;Kim and Kross, 2005;Hirshleifer et al, 2009;Hong et al, 2017;Finger, 1994;Murdoch and Krause, 1989). Dechow et al (1998) and Khansalar (2012) researched the association of earnings, accruals and cash flows and found results consistent with Finger (1994). The primary debate of past earnings better predictor than past cash flows for the estimation of forthcoming cash flows rejected in the study of (Barth et al, 2001).…”
Section: Future Cash Flows Prediction In Developed Countriesmentioning
confidence: 95%
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