What Determines Managers' Perceptions of Cash Flow Forecasting Quality? Evidence from a Multinational Corporation

49 Pages Posted: 9 Sep 2016

See all articles by Martin Glaum

Martin Glaum

WHU - Otto Beisheim School of Management

Peter Schmidt

Justus-Liebig-University Giessen, Germany, and Higher School of Economics (HSE) Moscow, Russia

Kati Schnürer

University of Giessen

Date Written: October 2016

Abstract

In this article, we develop and test a model of the determinants of managers' perceptions of cash flow forecasting quality in nonfinancial companies. We expect and find that managers' perceptions of the quality of cash flow forecasts are determined by the perceived quality of the input data, the effort invested in forecasting, and the efficiency of the related processes, and ultimately by a company's orientation toward financial goals. Our empirical analysis is based on data from a worldwide questionnaire survey at a multinational industrial company. While we find that managers assess forecasting effort lower and forecasting efficiency higher for direct cash flow forecasting than for indirect method forecasting, our analyses reveal that the variables in our model, the postulated relationships between them, and the estimated effect sizes are equally valid for both forecasting methods.

Suggested Citation

Glaum, Martin and Schmidt, Peter and Schnürer, Kati, What Determines Managers' Perceptions of Cash Flow Forecasting Quality? Evidence from a Multinational Corporation (October 2016). Journal of International Financial Management & Accounting, Vol. 27, Issue 3, pp. 298-346, 2016, Available at SSRN: https://ssrn.com/abstract=2836757 or http://dx.doi.org/10.1111/jifm.12045

Martin Glaum (Contact Author)

WHU - Otto Beisheim School of Management ( email )

Burgplatz 2
D-56179 Vallendar
Germany
+49 261 - 6509-315 (Phone)

Peter Schmidt

Justus-Liebig-University Giessen, Germany, and Higher School of Economics (HSE) Moscow, Russia ( email )

Giessen
Germany

Kati Schnürer

University of Giessen ( email )

Betriebswirtschaftslehre VII
Giessen, 35394
Germany

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