Abstract

http://ssrn.com/abstract=374961
 
 

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An Empirical Analysis of Analysts' Cash Flow Forecasts


Mark L. DeFond


University of Southern California - Leventhal School of Accounting

Mingyi Hung


The Hong Kong University of Science and Technology & University of Southern California


Journal of Accounting and Economics, Vol. 35, No. 1, pp. 73-100, April 2003

Abstract:     
This study investigates the relatively recent and growing trend in analysts disseminating operating cash flow forecasts. Consistent with our expectations, we find that analysts tend to forecast cash flows for firms where accounting, operating and financing characteristics suggest that cash flows are likely to be useful in interpreting earnings and assessing firm viability. Specifically, we find that analysts tend to forecast cash flows for firms with (1) large accruals, (2) more heterogeneous accounting choices relative to their industry peers, (3) high earnings volatility, (4) high capital intensity, and (5) poor financial health. These findings are consistent with financial analysts responding to market-based incentives to provide market participants with value-relevant information.

Keywords: analysts' forecasts, cash flows, earnings' usefulness

JEL Classification: G29, G12, M41, N20

Accepted Paper Series


Not Available For Download

Date posted: January 29, 2003  

Suggested Citation

DeFond, Mark L. and Hung, Mingyi, An Empirical Analysis of Analysts' Cash Flow Forecasts. Journal of Accounting and Economics, Vol. 35, No. 1, pp. 73-100, April 2003. Available at SSRN: http://ssrn.com/abstract=374961

Contact Information

Mark DeFond
University of Southern California - Leventhal School of Accounting ( email )
Accounting Building, Room 206
Los Angeles, CA 90089-0441
United States
213-740-5016 (Phone)
213-747-2815 (Fax)
Mingyi Hung (Contact Author)
The Hong Kong University of Science and Technology & University of Southern California ( email )
Hong Kong
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