Accruals, Cash Flow and Equity Values

Posted: 13 Sep 1999

See all articles by Mary E. Barth

Mary E. Barth

Stanford University - Graduate School of Business

William H. Beaver

Stanford University

John R. M. Hand

University of North Carolina Kenan-Flagler Business School

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School

Multiple version iconThere are 2 versions of this paper

Abstract

We find, as predicted, that the differential ability of accrual and cash flow components of earnings to help forecast future abnormal earnings and the persistence of the components results in the components having different valuation implications. We base our tests on Ohlson (1999) applied to fourteen industries. We find: (1) Accruals and cash flows aid in forecasting future abnormal earnings incremental to abnormal earnings and equity book value. (2) Accruals and cash flows provide explanatory power for equity market value incremental to equity book value and abnormal earnings. (3) There is evidence that accruals and cash flows valuation coefficients are consistent with the Ohlson model.

JEL Classification: G12, M41

Suggested Citation

Barth, Mary E. and Beaver, William H. and Hand, John R. M. and Landsman, Wayne R., Accruals, Cash Flow and Equity Values. Available at SSRN: https://ssrn.com/abstract=174857

Mary E. Barth (Contact Author)

Stanford University - Graduate School of Business ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-9040 (Phone)
650-725-0468 (Fax)

William H. Beaver

Stanford University ( email )

655 Knight Way
Stanford, CA 94305-5015
United States
650-723-4409 (Phone)
650-725-6152 (Fax)

John R. M. Hand

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-3173 (Phone)
919-962-4727 (Fax)

Wayne R. Landsman

University of North Carolina Kenan-Flagler Business School ( email )

McColl Building
Chapel Hill, NC 27599-3490
United States
919-962-3221 (Phone)
919-962-4727 (Fax)

Here is the Coronavirus
related research on SSRN

Paper statistics

Abstract Views
3,090
PlumX Metrics