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Journal articles on the topic 'Cash flow Australia Accounting'

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Author: Grafiati

Published: 10 December 2022

Last updated: 28 January 2023

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1

Ahmed, Kamran, Muhammad Nurul Houqe, John Hillier, and Steven Crockett. "Properties of analysts’ consensus cash flow forecasts for Australian firms." Accounting Research Journal 33, no. 1 (January 2, 2020): 128–47. http://dx.doi.org/10.1108/arj-11-2017-0197.

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Purpose The purpose of this paper is to determine the properties of analysts’ cash flows from operations (CFO) forecast generated for Australian listed firms as a productive activity, within the wider processes of financial disclosure in Australia. Design/methodology/approach Two categories of criteria are adopted: first, basic predictive statistical performance relative to a benchmark model and earnings forecasts; and second, relevance for equity pricing, as indicated by the market reaction to cash flow or forecast error reactions. The final sample comprised 2,138 observations between 2001 and 2016 and several regression models are estimated to determine the relative performance and market reaction. Findings Analysts’ consensus cash flow forecasts demonstrate poor predictive performance relative to earnings forecasts. Cash flow forecasts are typically naïve extensions of earnings forecasts. Furthermore, cash flow forecasts appear to be of minimal use for equity market participants in complementing earnings forecasts’ role in informing firms’ equity pricing. Practical implications While analysts’ earnings forecasts are useful for making predictions, the role of analysts’ cash flow forecasts in capital market functional efficiency appears quite limited. Originality/value This study is one of few that examines comparative usefulness of analysts’ earnings and cash flow forecasts and their predictive power using the Australian setting. Additionally, it enriches the sparse international literature on such forecasts.

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2

Ntoung Agbor Tabot, Lious, Outman Ben Chettah, and Eva Masárova. "Agency cost of type I and accounting numbers in Australia and India." Corporate Ownership and Control 13, no. 4 (2016): 307–16. http://dx.doi.org/10.22495/cocv13i4c2p4.

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This paper has as objective to assess the agency cost of type I on the value relevance of accounting numbers (earnings and book value) for all listed firms in the manufacturing, retailing and service industries in Australia and India from 2005 to 2012 using the modified version of the Ohlson’ model in Faud and Mohd, (2008) where price is express as a linear function of earnings, book value and various accounting numbers. As predicted, the results show that both earnings and book value are value relevance for the manufacturing, retailing and servicing industry in Australia and India. The presence of the free cash flow agency problem caused the value relevance of earnings and book value to decline in Australia and India. However, the effect is not stable across the difference industries. The results show that in the manufacturing industry, the effect caused by the free cash flow agency problem is relatively higher for Australia and India than in the retail and service industries. As a result, the firms in the manufacturing with free cash flow agency problem have lower earnings (book value) coefficients than those without free cash flow agency problem

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3

Ntoung Agbor Tabot, Lious, Huarte Galván Cecilio, and Felix Puime Guillén. "Operating cash flow and earnings under IFRS/GAAP: evidence from Australia, France & UK." Corporate Ownership and Control 13, no. 1 (2015): 1346–58. http://dx.doi.org/10.22495/cocv13i1c11p7.

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The purpose of this paper is to investigate the difference in the value relevance of operating cash flow and earnings in stock price before and after the mandatory IFRS adoption. The study basically uses Feltham and Ohlson (1995), Joos (1997) and other related studies valuation model. Using a sample of firms from 3 IFRS countries from 2003 to 2012, we find that operating cash flows seem to be more value relevance than earnings within and across country border after a switch to IFRS in Australia and the UK, and earnings seem to be more value relevance than operating cash flows in France. Additionally, Operating cash flow and earnings convey incremental explanatory power to explain share prices in Australia, France and the UK. After a switch to IFRS in 2005, our study shows that the difference in account number (operating cash flows and earnings) reduces across country border but increases within country when both the IFRS and local accounting standards are used. Taken together, our findings suggests that after a swift to the mandatory IFRS adoption, even though income statement and the statement of cash flow are very vital for strategic decisions, investors in Australia and UK are more likely to pay more value relevance to the statement of cash flow than income statement whereas in France, income state is more required than statement of cash flow.

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4

Lu, Meiting, Yaowen Shan, Sue Wright, and Yimeng Yu. "Operating cash flow asymmetric timeliness in Australia." Accounting & Finance 60, S1 (March 8, 2018): 587–627. http://dx.doi.org/10.1111/acfi.12349.

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5

Farshadfar, Shadi, and Reza Monem. "Discretionary accruals and the predictive ability of earnings in the forecast of future cash flows: Evidence from Australia." Corporate Ownership and Control 9, no. 1 (2011): 597–608. http://dx.doi.org/10.22495/cocv9i1c6art3.

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We examine whether discretionary and non-discretionary accruals improve the predictive ability of earnings for forecasting future cash flows in an Australian context. Using both within-sample and out-of-sample forecasting tests; we demonstrate that discretionary accruals improve the predictive ability of earnings in the forecast of future cash flows. Further, discretionary and non-discretionary accruals and direct method cash flow components together are more useful than (i) aggregate earnings, (ii) aggregate cash flow from operations and total accruals, and (iii) aggregate cash flow from operations, discretionary accruals and nondiscretionary accruals.

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6

Harris, Peter, William Stahlin, and Moade Fawzi Shubita. "US GAAP Conversion To IFRS: A Case Study Of The Cash Flow Statement." Journal of Business Case Studies (JBCS) 10, no. 1 (December 31, 2013): 15–20. http://dx.doi.org/10.19030/jbcs.v10i1.8325.

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International Reporting Standards (IFRS) has become the required framework for most of the world financial market economies as of January 1, 2011. This includes, in a non-comprehensive listing, the many European Union countries - Canada, Australia and New Zealand. In the United States, US Generally Accepted Accounting Principles (GAAP) is still required. However, plans are presently in place by the SEC to abandon US GAAP and to adhere to IFRS requirements by as early as for the period ending December 31, 2014. As such, it is important to introduce IFRS accounting rules in the college curriculum and make it a major component of accounting classes. This case study takes a US GAAP Prepared Cash Flow Statement and, based on the facts of the case, requires students to prepare an IFRS-based Cash Flow Statement. The need to understand both US GAAP and IFRS rules is required to adequately address this case study, which is most suitable for an Intermediary Accounting, Accounting Theory and a Financial Statement Analysis class, as well as an Investment Finance course, at the graduate level.

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7

WALKER, R. G., and S. P. ROBINSON. "Competing Regulatory Agencies With Conflicting Agendas: Setting Standards For Cash Flow Reporting In Australia." Abacus 30, no. 2 (September 1994): 119–39. http://dx.doi.org/10.1111/j.1467-6281.1994.tb00346.x.

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8

Farshadfar, Shadi. "The usefulness of operating cash flow information: Does format matter?" Corporate Ownership and Control 10, no. 1 (2012): 44–52. http://dx.doi.org/10.22495/cocv10i1art4.

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This study investigates whether the direct method of presenting cash flows from operations is superior to the indirect method in its ability to forecast future cash flows. It also considers the effect of industry characteristics on the relative usefulness of direct and indirect methods of cash flow presentation. The study, which uses a sample of Australian firms, finds that both the direct and indirect methods improve the forecast of future cash flows. However, the indirect method of reporting cash flows from operations is more relevant than the direct method in predicting future cash flows. Evidence from the industry-level analysis overall reinforces the main results.

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9

Ahmed, Kamran, and Muhammad Jahangir Ali. "Determinants and usefulness of analysts' cash flow forecasts: evidence from Australia." International Journal of Accounting & Information Management 21, no. 1 (February 22, 2013): 4–21. http://dx.doi.org/10.1108/18347641311299722.

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10

Yap, Christine. "Users' perceptions of the need for cash flow statements — Australian evidence." European Accounting Review 6, no. 4 (December 1997): 653–72. http://dx.doi.org/10.1080/09638189700000006.

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11

Henry, Nick, and Adam Cunningham. "Accounting and financial reporting considerations for oil and gas companies operating under Australia's proposed Carbon Pollution Reduction Scheme." APPEA Journal 49, no. 2 (2009): 585. http://dx.doi.org/10.1071/aj08058.

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The introduction of the Carbon Pollution Reduction Scheme (CPRS) is one of Australia’s most significant economic reforms since the deregulation of the Australian financial markets in the 1980s and will have a significant impact on companies across a number of sectors—in particular those in the oil and gas industry. Given the significant greenhouse gas emission footprint of the oil and gas industry in Australia, for many oil and gas companies the cost of buying carbon pollution permits and/or reducing emissions through targetted abatement programs is likely to be significant. From a strategic perspective, understanding how the proposed CPRS could affect future cash flows will be critically important. Financial markets have already begun to factor the potential cash flow impacts into valuations of companies likely to be directly impacted by the legislation. Public disclosure of the potential impacts of the CPRS is considered both an opportunity and threat for those companies exposed to it. The proposed CPRS will also pose significant governance, compliance and reporting challenges for those companies directly impacted by it. Measurement and reporting of emissions information will need to be subjected to the same level of control and rigour as other financial information. This paper will examine both the immediate and longer term accounting and financial reporting considerations for oil and gas companies as a result of the CPRS, focussing on what companies need to be doing now to be prepared for the introduction of this legislation.

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12

He, Li Yu (Colly), Sue Wright, and Elaine Evans. "Is fair value information relevant to investment decision-making: Evidence from the Australian agricultural sector?" Australian Journal of Management 43, no. 4 (July 11, 2018): 555–74. http://dx.doi.org/10.1177/0312896218765236.

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Despite major accounting standards boards worldwide continuing to use fair value extensively, academic evidence on the relevance of fair value accounting has focused on financial assets. This study breaks new ground to provide the first empirical evidence for the agricultural sector on the relevance of fair value accounting. It examines the forecasting power of the fair value of biological assets for future operating cash flows. Using all agribusinesses listed in Australia, where fair value accounting was first implemented in the agricultural sector, we find that fair value of biological assets does not provide incremental forecasting power for future operating cash flows, whether market-determined prices or managerially estimated value is used. The findings of this study provide empirical support for the call by Elad and Herbohn in 2011 for the International Accounting Standards Board (IASB) to revisit the implementation of fair value accounting in the agricultural sector. JEL Classification: G14, G38, M41, Q18

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Gallery, Gerry, and Jodie Nelson. "The reliability of mandatory cash expenditure forecasts provided by Australian mining exploration companies in quarterly cash flow reports." Accounting Research Journal 21, no. 3 (November 14, 2008): 263–87. http://dx.doi.org/10.1108/10309610810922503.

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14

Vesty, Gillian, and Judith Oliver. "Corporate strategy and accounting for sustainability in investment appraisal." Corporate Ownership and Control 11, no. 2 (2014): 377–88. http://dx.doi.org/10.22495/cocv11i2c3p6.

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This paper reports on an exploratory study that sought to understand how environmental and social factors are included in capital investment appraisal. Views were gathered from CFOs and sustainability managers of large Australian companies. The focus of the study was on the links between sustainability, strategy, employee expertise and influence in accounting system design. Investment appraisal that that does not incorporate environmental and social factors could pose potential governance risks for senior management, even legal ramifications for organisations that appear to be ignoring or ‘greenwashing’ their activities. The potential disconnect between widely applied discounted cash flow methodology and the principles underlying accounting for sustainability is discussed in light of investing scarce resources to support corporate strategy. Early findings suggest the emphasis on traditional DCF and NPV and how it is used alongside the harder-to-quantify sustainability issues, still needs further investigation. We need to better understand the extent to which the complex qualitative sustainability factors are being modelled and included in cash flows and to what extent the qualitative narrative takes precedence in decisions

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15

JONES, STEWART, and JANEK RATNATUNGA. "THE DECISION USEFULNESS OF CASH-FLOW STATEMENTS BY AUSTRALIAN REPORTING ENTITIES: SOME FURTHER EVIDENCEF." British Accounting Review 29, no. 1 (March 1997): 67–85. http://dx.doi.org/10.1006/bare.1996.0037.

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16

Parker, David, and Jon Robinson. "A brief history of the Australian discounted cash flow practice standard." Journal of Property Investment & Finance 18, no. 2 (April 2000): 196–211. http://dx.doi.org/10.1108/14635780010324349.

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17

Rashid, Kashif, Sardar M. N. Islam, and Siti Nuryanah. "The role of regulatory authority in affecting firm performance." Corporate Ownership and Control 11, no. 4 (2014): 539–48. http://dx.doi.org/10.22495/cocv11i4c6p4.

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This paper examines the role of regulatory authority in affecting the performance or value of a firm. The study has used panel data of 120 companies for the years 2000 to 2003 for developing (Malaysia) and developed (Australia) financial markets. The findings of the study suggest that there is a positive relationship between the regulatory authority efficiency and the financial health of a firm. The dual leadership structure results in the value creation for shareholders in these markets as the regulatory authorities force independent CEO to defend the rights of shareholders. On the contrary, the external regime in these markets cannot manage the agency cost of debt as the free cash flow is not utilised efficiently to resolve the principal (shareholders) and agent (managers) conflicts in these markets. Finally, the effectiveness of regulatory authorities results in higher information efficiency and optimal utilisation of assets in the market leading to defending the rights of shareholders.

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18

Gul, Ferdinand A., and Judy S. L. Tsui. "Free Cash Flow, Debt Monitoring, and Audit Pricing: Further Evidence on the Role of Director Equity Ownership." AUDITING: A Journal of Practice & Theory 20, no. 2 (September 1, 2001): 71–84. http://dx.doi.org/10.2308/aud.2001.20.2.71.

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This paper tests the hypothesis that the positive association between Free Cash Flow (FCF) and audit fees is stronger (weaker) for firms with low (high) levels of director equity ownership. Based on the debt monitoring hypothesis, we also test the hypothesis that the FCF/director equity ownership interaction is less (more) likely to exist for firms with high (low) levels of debt. OLS regression analyses of 157 and 140 low growth Australian firms audited by Big 6 auditors for the years 1992 and 1993 provide support for the hypotheses.

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19

Jescheck, Christoph. "The Substantive Scope of Tax Treaties in a Post-BEPS World: Article 2 OECD MC (Taxes Covered) and the Rise of New Taxes." Intertax 45, Issue 5 (May 1, 2017): 382–90. http://dx.doi.org/10.54648/taxi2017030.

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Several countries have recently either introduced or announced plans for new taxes addressing base erosion and profit shifting by multinational enterprises. These taxes include the Indian Equalization Levy, the UK Diverted Profits Tax, the announced Australian Diverted Profits Tax, the Netherlands Excessive Severance Tax as well as the Belgian Fairness Tax. Moreover, US Republicans plan to substitute the corporation tax with a (destination based) cash flow tax. It remains uncertain whether these hybrid taxes are covered by tax treaties. The uncertainty relates both to the definition of an income tax according to Article 2(2) OECD MC and to the term ‘identical or substantially similar taxes’ pursuant to Article 2(4) OECD MC. Against this background of legal uncertainty, the authors favour a procedural solution introducing an obligation for the contracting states to reach a mutual agreement as to whether or not new taxes are covered by the tax treaty.

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20

Langhi, Laurent, Julian Strand, and Ludovic Ricard. "Flow modelling to quantify structural control on CO2 migration and containment, CCS South West Hub, Australia." Petroleum Geoscience 27, no. 2 (February 3, 2021): petgeo2020–094. http://dx.doi.org/10.1144/petgeo2020-094.

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In order to reduce uncertainties around CO2 containment for the South West Hub CCS site (Western Australia), conceptual fault hydrodynamic models were defined and numerical simulations were carried out. These simulations model worst-case scenarios with a plume reaching a main compartment-bounding fault near the proposed injection depth and at the faulted interface between the primary and secondary containment interval.The conceptual models incorporate host-rock and fault properties accounting for fault-zone lithology, cementation and cataclastic processes but with no account made for geomechanical processes as the risk of reactivation is perceived as low. Flow simulations were performed to assess cross-fault and upfault migration in the case of plume–faults interaction.Results near the injection depth suggest that the main faults are likely to experience a significant reduction in transmissivity and impede CO2 flow. This could promote the migration of CO2 vertically or along the stratigraphic dip.Results near the interface between the primary and secondary containment intervals show that none of the main faults would critically control CO2 flow nor would they act as primary leakage pathways. CO2 flow is predicted to be primarily controlled by the sedimentological morphology. The presence of baffles in the secondary containment interval is expected to be associated with local CO2 accumulations; additional permeability impacts introduced by faults are minor.Thematic collection: This article is part of the Geoscience for CO2 storage collection available at: https://www.lyellcollection.org/cc/geoscience-for-co2-storage

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21

Sun, Lan. "Accrual mispricing in the era of corporate governance reforms." Asian Review of Accounting 28, no. 3 (May 5, 2020): 373–94. http://dx.doi.org/10.1108/ara-08-2019-0143.

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PurposeThis study is primarily motivated by the increasing concern of the academic, practitioners, regulators and standard setters regarding the quality of earnings and financial reporting. The purpose is to investigate whether the accrual anomaly exists in Australia; whether the occurrence of the accrual anomaly is attributed to the discretionary accruals component stemming from managerial discretion; and the impact of corporate governance reforms on accrual mispricing.Design/methodology/approachThis study employs the Mishkin (1983) rational expectations test to examine whether the earnings expectations embedded in stock prices accurately reflect the differential persistence of earnings components. It also employs the hedge portfolio trading strategy to examine whether taking a long position in firms with low accruals and a short position in firms with high accruals will yield positive abnormal stock returns.FindingsThe results show that investors overestimate the persistence of accruals and underestimate the persistence of cash flows and subsequently, overprice the accruals and underprice the cash flows. The evidence of accrual mispricing is severe for the component of discretionary accruals. Nonetheless, the association between discretionary accruals and abnormal returns are weakened during the corporate governance reforms period.Research limitations/implicationsIt should be cautious to attribute the investors' ability to accurately price accruals and cash flows to the passage of corporate governance reform program. Despite there is control for firm size, book-to-market, PE multiple, growth and leverage, other macro-economic factors such as interest rates, inflation and GDP could potentially have an impact on stock returns.Practical implicationsThe passage of corporate governance reform program has increased the level of financial reporting disclosure and the monitoring of management, which subsequently improved accruals persistence and earnings quality. A direct practical implication is that investors should better understand the information in accruals for future earnings when the corporate disclosure environment is strengthened.Social implicationsThis study provides useful information to regulators, academics and investors interested in market efficiency and accrual mispricing. The results suggest that the reform of corporate governance is associated with more efficient prices. This may be of interest to the regulators who intend to improve earnings quality and financial reporting environment through the regulatory reform.Originality/valueTo test the accrual anomaly in the period of corporate governance reforms is particularly useful to regulators and policy makers. It allows regulators and policy makers to gain insight as whether the change of regulation has been effective – more transparent and timely reporting of financial information are supposed to help the investors to better understand the accruals and thus mitigate the potential for accrual mispricing.

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22

Kasian, P. A. "MEASURING THE ECONOMIC PERFORMANCE AND VALUE OF COMPANIES." APPEA Journal 35, no. 1 (1995): 751. http://dx.doi.org/10.1071/aj94051.

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Accounting performance measures such as earnings per share growth and return on equity and their related valuation measures (price to earnings and price to book ratios) have severe limitations in comparing the economic performance of companies and explaining how the market prices stocks. Although the traditional cash flow-based valuation methodologies as taught in business schools are, in theory, more sound approaches, they suffer problems in practical implementation. In particular, the large number of forecasts and arbitrary decisions that need to be made in deciding upon an appropriate discount rate prevent meaningful back testing of the approach. Hence the validity of the assumptions being made are always open to question. This approach also fails to provide a measure of a company's actual current performance but rather measures forecasted performance.Cash flow return on investment (CFROI) overcomes many of these limitations. It measures the rate at which assets are generating cash flow while explicitly taking into account the distortions caused by inflation, asset age, asset life, and different mixes of depreciating and non-depreciating assets. CFROI spread, the difference between a firm's performance and its market-derived cost of capital, has a much higher correlation with how the market values companies. It has provided a useful insight into Santos' share price performance as well as the efficiency with which the company utilises its asset base relative to other Australian and US oil and gas companies. The CFROI also lends itself to the valuation of individual companies in such a way that it enables meaningful back testing to be performed. Using Santos as an example it was found that the assumptions implicit in this approach are applicable to oil and gas companies.

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Zeller, Thomas, John Kostolansky, and Michail Bozoudis. "An IFRS-based taxonomy of financial ratios." Accounting Research Journal 32, no. 1 (May 7, 2019): 20–35. http://dx.doi.org/10.1108/arj-10-2017-0167.

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Purpose This study aims to identify a taxonomy of financial ratios derived from financial statements prepared using International Financial Reporting Standards (IFRS). The work first empirically establishes and then statistically validates the taxonomy of financial attributes captured in financial ratios. In 2005, the European Commission required that publicly traded companies in the European Union use IFRS as the basis for financial reporting. In the same year, Australia adopted IFRS as a basis for financial reporting. Since then, 120 countries and reporting jurisdictions have adopted IFRS as the basis for financial reporting. Given that IFRS predominate in the financial reporting world, it seems essential to establish and validate IFRS-based ratio attributes. Only then can reliance upon and comparability of these ratios be warranted (Altman and Eisenbeis, 1978). Using principle component analysis, the authors empirically identify nine stable attributes (factors) for ratios drawn from IFRS-based financial statements from 84 counties. The findings provides an empirical basis to formulate testable hypotheses regarding the predictive and descriptive utility of financial ratios draw from IFRS-based financial statements. Design/methodology/approach The paper begins with a broad category of IFRS-based financial ratios, 50, found in practice and research, including income statement, balance sheet, cash flow, profitability and liquidity measures. Then, a sample of companies from the manufacturing sector is segmented using IFRS as a basis of financial statement reporting. Next, principal component analysis, a method of factor analysis, is applied to empirically identify factors and financial attributes captured in financial ratios used in research inquiry and financial analysis. Findings The authors find that the financial attributes captured by IFRS-based ratios go well beyond the traditional measures of profitability, liquidity and solvency. The authors identify nine factors that are interpretable and stable over the period, 2011-2015: asset relationship, asset turnover, capital structure, expense insight, fixed asset usage, inventory turnover, liquidity, profitability margin and performance return. Interestingly, the authors did not find a separate cash flow factor. Most importantly, the results corroborate that IFRS-based ratios are consistent and comparable, despite innate country differences that have been shown to influence the application, interpretation and use of IFRS. Research limitations/implications The efforts are limited to the manufacturing sector. The financial attributes may be different in service, distribution and retail sectors. Also, limiting the effort are the ratios selected in this study. A broader range of ratios may widen the identification of unique stable factors over time. Practical implications The findings provide a basis for research and analysis efforts regarding the validity, comparability and stability of IFRS-based financial ratios. Most importantly, the results corroborate that IFRS-based ratios are consistent and comparable, despite innate country differences that have been shown to influence the application, interpretation and use of IFRS. The findings should be of interest to international and national financial reporting standard setters, investors and analysts. Originality/value An empirically evidenced classification system for IFRS-based financial ratios has yet to be determined based on a financial statements across a wide breadth of countries and reporting jurisdictions. Identification of stable interpretable factors, financial attributes, has been limited. The first is that inquiry has been limited to domestic-based, such as US Generally Accepted Accounting Principles, financial ratios. The second is inquiry has been limited to IFRS-based financial ratios within a specific country.

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24

Kalyebara, Baliira, and Abdullahi D. Ahmed. "Capital markets, corporate governance and capital budgeting: Implications for firm value." Corporate Ownership and Control 9, no. 3 (2012): 9–26. http://dx.doi.org/10.22495/cocv9i3art1.

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The conventional discounting capital budgeting techniques have been widely criticized for being inappropriate in incorporating multi-criteria interactions and for focusing on one-off single objective of maximizing net present value. This paper modifies a Multiple Objective Linear Programming (MOLP) optimization model of Levary and Seitz (1990). It adds to the objective function the mitigation of agency costs as a proxy of good corporate governance principles and capital market interactions. The goal of the study is to examine the impact of agency costs on the present value of a long term capital project and investment appraisal decision making in the airline industry to support better capital investment decision making in the future. Recent collapses of high profile companies in airline industry and other industries such as Flyglobespan Airline (in the year 2009) in Scotland, Ansett Airline (in the year 2001)in Australia, Enron(in the year 2001)and Lehman Brothers (in 2008)in the U.S whose impact is still being experienced today provide us with evidence of how important the minimization of agency costs is for the survival and success of organisations and the huge amounts involved as a result of poor corporate governance. The results reveal that debt financing which is often provided by capital markets plays an influential role in shaping the investment appraisal decisions through interest rates and debt covenants embedded in the debt contracts. The results show that mitigation of agency costs improves the firm’s cash flow, financial management and corporate governance. It discourages illegal earnings management practices, enhances investment decisions, investors’ confidence and reliability in the firm’s investment decisions and hence enhances the firm value.

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Sangchan, Pinprapa, Haiyan Jiang, and Md Borhan Uddin Bhuiyan. "The decision usefulness of reported changes in fair values and fair value measurement-related disclosure for debtholders: evidence from Australian real estate industry." Accounting Research Journal 33, no. 6 (October 21, 2020): 729–47. http://dx.doi.org/10.1108/arj-11-2019-0222.

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Purpose This paper aims to examine the information content of changes in fair values of investment property reported under international accounting standards (IAS) 40 and International Financial Reporting Standards (IFRS) 13 to debtholders. This study further examines the effect of fair value hierarchy inputs, valuer types and the quality of fair value measurement-related disclosure on the information usefulness of changes in fair value. Design/methodology/approach This paper performs a panel regression on the cost of debt capital and changes in fair value of investment properties, and fair value measurement features using data covering periods 2007–2015 from Australian real estate companies. Findings The findings suggest that changes in fair value of investment property are informative about the real estate firm’s future cash flow to debtholders. Also, the findings show that the use of unobservable inputs in an active market (Level 3 inputs) and Level 2 has no different impacts on the cost of debts. Also, this paper documents that employing the directors solely in valuation may lead to a higher cost of debts. Furthermore, this paper reports that an extensive fair value disclosure appears no additional value in the debt decision. Originality/value Collectively, the findings indicate that although the use of unobservable inputs is common in the real estate sector, information on the changes of the fair value of investment properties are informative to debtholders. The findings have important implications for accounting standard setters to consider revisiting the IAS 40 and IFRS 13 on whether the independent valuation should be required and whether the extensive disclosure requirement is worthwhile.

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Colloff, Matthew J., Peter Caley, Neil Saintilan, Carmel A. Pollino, and Neville D. Crossman. "Long-term ecological trends of flow-dependent ecosystems in a major regulated river basin." Marine and Freshwater Research 66, no. 11 (2015): 957. http://dx.doi.org/10.1071/mf14067.

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The case for restoring water to the environment in the Murray–Darling Basin, Australia, is based mainly on condition assessments, although time series provide valuable information on trends. We assessed trends of 301 ecological time series (mean 23 years, range 1905–2013) in two categories: (1) ‘population’ (abundance, biomass, extent) and (2) ‘non-population’ (condition, occurrence, composition). We analysed trends using log-linear regression, accounting for observation error only, and a state–space model that accounts for observation error and environmental ‘noise’. Of the log-linear series (n=239), 50 (22%) showed statistically significant decline, but 180 (78%) showed no trend. For state–space series (n=197) one increased, but others were stable. Distribution of median exponential rates of increase (r) indicated a small but statistically significant declining trend, though 35–39% of the series were positive. Our analysis only partly supports, though does not refute, prevailing assumptions of recent ecological decline in the Murray–Darling Basin. The pattern is of fluctuating stability, with declines during droughts and recovery after flood. The overall trend from our meta-analysis is consistent with a pattern of historical decline to a hybrid ecosystem followed by slow, recent decline for some components and stability for others, with considerable variation in trends of specific ecological components: in short, there are ecological ‘winners’ and ‘losers’.

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Gabe, Jeremy, Spenser Robinson, Andrew Sanderford, and Robert A. Simons. "Lease structures and occupancy costs in eco-labeled buildings." Journal of Property Investment & Finance 38, no. 1 (October 4, 2019): 31–46. http://dx.doi.org/10.1108/jpif-07-2019-0098.

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Purpose The purpose of this paper is to investigate whether energy-efficient green buildings tend to provide net lease structures over gross lease ones. It then considers whether owners benefit by trading away operational savings in a net lease structure. Design/methodology/approach Empirical models of office leasing transactions in Sydney, Australia, with wider transferability supported by analysis of office rent data in the USA. Findings Labeled green buildings are approximately four to five times more likely than non-labeled buildings to use a net lease structure. However, despite receiving operational savings, tenants in net leases pay higher total occupancy costs (TOC), benefiting owners. On average, the increase in TOC paid by tenants in a net lease is equal to or greater than savings attributed to an eco-labeled building. Practical implications A full accounting of TOC in eco-labeled buildings suggests that net lease structures provide numerous benefits to owners that offset the loss of trading away operational savings. Originality/value The principal-agent market inefficiency, or “split incentive,” is a widely cited barrier to private investment in energy-efficient building technology. Here, a uniquely broad look at rental cash flows suggests its role as a barrier is exaggerated.

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Khansalar, Ehsan, and Mohammad Namazi. "Cash flow disaggregation and prediction of cash flow." Journal of Applied Accounting Research 18, no. 4 (November 13, 2017): 464–79. http://dx.doi.org/10.1108/jaar-02-2015-0011.

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Purpose The purpose of this paper is to investigate the incremental information content of estimates of cash flow components in predicting future cash flows. Design/methodology/approach The authors examine whether the models incorporating components of operating cash flow from income statements and balance sheets using the direct method are associated with smaller prediction errors than the models incorporating core and non-core cash flow. Findings Using data from US and UK firms and multiple regression analysis, the authors find that around 60 per cent of a current year’s cash flow will persist into the next period’s cash flows, and that income statement and balance sheet variables persist similarly. The explanatory power and predictive ability of disaggregated cash flow models are superior to that of an aggregated model, and further disaggregating previously applied core and non-core cash flows provides incremental information about income statement and balance sheet items that enhances prediction of future cash flows. Disaggregated models and their components produce lower out-of-sample prediction errors than an aggregated model. Research limitations/implications This study improves our appreciation of the behaviour of cash flow components and confirms the need for detailed cash flow information in accordance with the articulation of financial statements. Practical implications The findings are relevant to investors and analysts in predicting future cash flows and to regulators with respect to disclosure requirements and recommendations. Social implications The findings are also relevant to financial statement users interested in better predicting a firm’s future cash flows and thereby, its firm’s value. Originality/value This paper contributes to the existing literature by further disaggregating cash flow items into their underlying items from income statements and balance sheets.

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Aghdas Jafari Motlagh, Aghdas Jafari Motlagh. "Accounting: Cash Flow Statement." IOSR Journal of Business and Management 7, no. 4 (2013): 109–16. http://dx.doi.org/10.9790/487x-074109116.

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Staubus, George J. "Cash Flow Accounting and Liquidity: Cash Flow Potential and Wealth." Accounting and Business Research 19, no. 74 (March 1989): 161–69. http://dx.doi.org/10.1080/00014788.1989.9728846.

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Kamata, Nobuo. "Visitation of Cash Flow Accounting." TRENDS IN THE SCIENCES 6, no. 10 (2001): 54–56. http://dx.doi.org/10.5363/tits.6.10_54.

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Chernenko, Alexey, and Tatyana Onokoy. "METHOD OF CASH FLOW ACCOUNTING." Bulletin of South Ural State University series "Economics and management" 11, no. 1 (2017): 99–105. http://dx.doi.org/10.14529/em170113.

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Almeida, Heitor, Murillo Campello, and Michael S. Weisbach. "The Cash Flow Sensitivity of Cash." Journal of Finance 59, no. 4 (August 2004): 1777–804. http://dx.doi.org/10.1111/j.1540-6261.2004.00679.x.

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French, Nick, and Laura Gabrielli. "Discounted cash flow: accounting for uncertainty." Journal of Property Investment & Finance 23, no. 1 (February 2005): 75–89. http://dx.doi.org/10.1108/14635780510575102.

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D'Espallier, Bert, Sigrid Vandemaele, and Ludo Peeters. "Investment-Cash Flow Sensitivities or Cash-Cash Flow Sensitivities? An Evaluative Framework for Measures of Financial Constraints." Journal of Business Finance & Accounting 35, no. 7-8 (September 2008): 943–68. http://dx.doi.org/10.1111/j.1468-5957.2008.02101.x.

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McEnroe, John E. "Cash Flow Accounting: is It Time For Increased Disclosures?" Journal of Applied Business Research (JABR) 12, no. 1 (September 12, 2011): 47. http://dx.doi.org/10.19030/jabr.v12i1.5836.

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Cash flow reporting has attracted increased attention in the United States, especially in the past decade. However, despite the use of per share cash flow information by security analysts, the Financial Accounting Standards Board (FASB) has prohibited its disclosure. This article provides a historical perspective of cash flow accounting in the U.S., as well as a discussion of cash flow advocates. The final section presents arguments for increased disclosures in the area of cash flows, including operating cash flow on a per share basis and a schedule of free cash flows.

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Sutrisna, Monty, and Jack Goulding. "Managing information flow and design processes to reduce design risks in offsite construction projects." Engineering, Construction and Architectural Management 26, no. 2 (March 18, 2019): 267–84. http://dx.doi.org/10.1108/ecam-11-2017-0250.

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PurposeFollowing the increasing need for faster construction, improved quality and evidence value propositions, offsite construction is increasingly being proffered as a viable contender to “traditional” construction approaches. However, whilst evidence supports the move towards offsite, its uptake has been lower than expected. Whilst the precise reasons for this seem to be influenced by a number of issues, including contextual drivers and market maturity; some project stakeholders also view offsite as carrying greater risks. The purpose of this paper is to report on the quality of information flow, in particular, the impact and influence of this on design risks in offsite construction projects.Design/methodology/approachAn existing design risk framework is used as the point of departure for this research. This is further expanded into a specific model for evaluating offsite construction projects design risks, the rubrics of which were informed by two case studies of offsite construction projects in Australia and the UK analysed with a process-tracing technique. Whilst these cases were geographically separated, the constructs were aligned to uncover fundamental design information requirements and concomitant risks associated with offsite.FindingsThe findings of the research reported in this paper include the crucial information feeding into the design process emanating from the lifecycle of offsite construction projects, namely, design, offsite (manufacturing), handling and transporting, site works and installation and also occupancy. These are contextualised within the four categories, namely, client requirements, project requirements, regulation aspects and social aspects and the final outcomes were summarised into a holistic diagram.Originality/valueGiven that the offsite construction has shifted the working paradigm into assigning a significant level of efforts and emphasis at the front end of the construction projects, the importance of its design process and hence design risks management has gone up significantly in construction projects delivered using this technique. This research and paper contributes significantly to the built environment domain by identifying the crucial aspects along the project lifecycle to be considered to minimise the potential occurrence of design risks and hence increasing the confidence of project stakeholders in adopting offsite construction techniques in their projects.

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Eng, Li Li, and Thanyaluk Vichitsarawong. "Usefulness of Accounting Estimates." Journal of Accounting, Auditing & Finance 32, no. 1 (July 26, 2016): 123–35. http://dx.doi.org/10.1177/0148558x16657756.

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This is an exploratory study to examine the quality or usefulness of accounting estimates of companies in China and India over time. Specifically, we examine how well the accounting estimates are able to predict future earnings and cash flows during the period 2003-2013. The results for India indicate that the out-of-sample earnings and cash flow predictions derived are more accurate and more efficient in the more recent period (2010-2013) than the earlier period (2003-2006). In contrast, the out-of-sample earnings and cash flow predictions for China are generally more biased, less accurate, and less efficient. The results indicate abnormal returns earned on hedge portfolios formed on earnings (cash flow) predictions for India in the recent period. In contrast, none of the portfolios for China earn positive returns. The results suggest that the accounting estimates in India in recent years have become better predictors of future earnings and cash flow than accounting estimates in the earlier period. However, the accounting estimates in China are not relevant for predicting earnings and cash flows over the years in the sample period.

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Greenberg, Robert R., Glenn L. Johnson, and K. Ramesh. "Earnings versus Cash Flow as a Predictor of Future Cash Flow Measures." Journal of Accounting, Auditing & Finance 1, no. 4 (October 1986): 266–77. http://dx.doi.org/10.1177/0148558x8600100402.

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The FASB has asserted, without proof, that information about an enterprise's earnings based on accrual accounting generally provides a better indication of a company's ability to generate favorable cash flows than information about cash flows themselves. This study tests that assertion, empirically. The test results provide empirical evidence supporting the FASB's contention.

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Chiou, Jeng-Ren, Yenn-Ru Chen, and Ting-Chiao Huang. "Assets Expropriation via Cash Dividends? Free Cash Flow or Tunneling." China Journal of Accounting Research 3 (June 2010): 71–93. http://dx.doi.org/10.1016/s1755-3091(13)60020-9.

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Boussard, Daniel, and Bernard Colasse. "Funds-flow statements and cash-flow accounting in France." European Accounting Review 1, no. 2 (December 1992): 229–54. http://dx.doi.org/10.1080/09638189200000022.

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Lorek, Kenneth S., and G. Lee Willinger. "Multi-Step-Ahead Quarterly Cash-Flow Prediction Models." Accounting Horizons 25, no. 1 (March 1, 2011): 71–86. http://dx.doi.org/10.2308/acch.2011.25.1.71.

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SYNOPSIS: We provide new empirical evidence supportive of the Brown-Rozeff ARIMA model as a candidate univariate statistically based expectation model for multi-period-ahead projections of quarterly cash flows. It provides 1- through 20-step-ahead projections of quarterly cash flows that are significantly more accurate than those generated by the premier multivariate quarterly time-series, disaggregated-accrual regression model popularized by Lorek and Willinger (1996). We also find that both quarterly earnings and quarterly cash flow from operations are modeled by the same Brown-Rozeff ARIMA structure, although the autoregressive and seasonal moving-average parameters of the quarterly earnings model are significantly larger than those of the cash-flow prediction model. This finding is consistent with Beaver (1970) and Dechow and Dichev (2002), among others, who argue that accounting accruals induce incremental amounts of serial correlation in the quarterly earnings time series vis-a`-vis the time series of quarterly cash flows. Such findings may be of interest to analysts who wish to derive multi-step-ahead cash-flow predictions, and accounting researchers attempting to adopt a statistical proxy for the market’s expectation of quarterly cash flows. Finally, we propose a forecasting schema by which statistically based cash-flow forecasts are adjusted upwards or downwards via qualitative assessments regarding the economy, industry, and firm by analysts employing fundamental financial analysis.

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Lee, T. A., and A. W. Stark. "Ijiri's Cash Flow Accounting and Capital Budgeting." Accounting and Business Research 17, no. 66 (March 1987): 125–31. http://dx.doi.org/10.1080/00014788.1987.9729791.

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Lawson, Gerry, and Peter Moeller. "Research on cash flow accounting and analysis." European Accounting Review 6, no. 4 (December 1997): 627–28. http://dx.doi.org/10.1080/09638189700000004.

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Mohammed, Rebaz Mohammed Hussein. "Accrual accounting basis and cash flow future predictions." Journal of Global Economics and Business 3, no. 10 (July 1, 2022): 121–33. http://dx.doi.org/10.31039/jgeb.v3i10.52.

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Cash flow statement is considered one of the key financial statements that the accounting standards, rules whether international or local have obliged companies to prepare at the end of the end of the period year, in addition to the other financial such as income statement and the statements financial position. The statements of cash flow is regarded as the most significant tool for financial analysis that helps users to make different types of economics decisions with a degree of rationality and reasonability, as well as predicting the future of company. The aim of this paper is to show the relationship between the statement of cash flows based on accrual and future forecasts of cash flow for companies by analyzing figures and ratios of this statement. To achieve the objectives of the paper, the researcher relied on reviewing 14 related studies that were published in different journals and by different authors for time periods (2016 - 2020). This study reached a number of results based on the aforesaid studies, the most important of which is that the accrual-based accounting rules relate to the future cash flow of companies, including accounts receivable, accounts payable, expenses, depreciation, etc. Moreover, based on these results, it is expected that future research will explore other financial factors that influence the company's future cash flow, for example, the company's financial risk.

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Kim, Tae-Nyun. "The impact of cash holdings and external financing on investment-cash flow sensitivity." Review of Accounting and Finance 13, no. 3 (August 5, 2014): 251–73. http://dx.doi.org/10.1108/raf-09-2012-0080.

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Purpose – This paper aims to propose several factors which can explain the negative relationship between financial constraints and investment-cash flow sensitivity. Design/methodology/approach – The author uses traditional fixed effects model and minimum distance panel estimation by Erickson and Whited (2000) to estimate investment-cash flow sensitivity in the cash flow-augmented investment equation. In addition, principal component analysis is used to construct a financial constraints measure. Findings – First, it was found that substitutability between cash holdings and free cash flow can partially explain why financially constrained firms do not depend on cash flow as heavily as we expect. Second, it was confirmed that the level of net external financing can also partially explain the investment-cash flow sensitivity puzzle. Furthermore, it was argued that the influence of cash holdings and external financing on investment-cash flow sensitivity is caused by the low level of internal cash flow for financially constrained firms. This argument is supported by our findings from an examination of investment-cash flow sensitivity for bank-dependent firms during the recession periods. Originality/value – This paper contributes to the literature by suggesting possible partial explanations for the contradictory relationship between investment-cash flow sensitivity and financial constraints.

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Andrén, Niclas, and Håkan Jankensgård. "Disappearing investment‐cash flow sensitivities: Earnings have not become a worse proxy for cash flow." Journal of Business Finance & Accounting 47, no. 5-6 (January 27, 2020): 760–85. http://dx.doi.org/10.1111/jbfa.12427.

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Wang, Li, and Stephen Makar. "Hedge accounting and investors’ view of FX risk." International Journal of Accounting & Information Management 27, no. 3 (August 5, 2019): 407–24. http://dx.doi.org/10.1108/ijaim-10-2017-0121.

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Purpose This paper aims to examine the foreign exchange (FX) risk effects of cash flow hedge accounting (HA). To the extent the HA qualification criteria and detailed documentation give investors confidence that FX derivatives effectively hedge risk, market-assigned FX risk premiums will be lower for firms using cash flow HA. Design/methodology/approach Probit analyses rely on the HA designation to examine the decision to use cash flow HA. Primary analyses test the hypothesized relationship between the magnitude of FX risk premiums and such HA use. Additional analyses allow for the interaction between cash flow HA use and the extent of FX derivatives use. Findings Hypothesis tests indicate that the magnitude of the FX risk premium is, on average, lower for firms designated as effective cash flow hedgers. In additional tests, the evidence suggests that the market assigns a lower FX risk premium to firms using a higher level of FX derivatives as effective cash flow hedges. Practical implications The findings suggest that cash flow HA provides risk-relevant information to investors. Such positive effects of HA on investors’ understanding of risk management may guide US accounting regulators in their efforts to improve HA. Corporate treasurers also may benefit from these insights into evaluating the use of HA. Originality/value Responding to the call for research on the risk relevance of cash flow HA, this paper merges the HA literature with the FX risk management literature to directly examine the relationship between HA use and FX risk premiums for manufacturing firms. The authors take an innovative approach using FX rates to which each firm is most exposed and provide evidence consistent with the argument that this approach is helpful in understanding both the decision to use cash flow HA and the effect of such HA use on market-assigned FX risk premiums.

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Aharon, David Yecham, Yoram Kroll, and Sivan Riff. "Degree of free cash flow leverage." Review of Accounting and Finance 18, no. 3 (August 12, 2019): 346–65. http://dx.doi.org/10.1108/raf-03-2018-0061.

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Purpose This paper aims to forgo the conventional (degree of operating leverage) risk measure by replacing elasticity of operating profits with respect to output with elasticity of free cash flow (FCF) with respect to optimal output and by considering exogenous random demand shocks for the firm’s products as a source of risk. Design/methodology/approach The elasticity risk measure accounts for corporate taxes and the cost of bankruptcy. The methodology is selecting optimal level of production investment and capital structure to generate efficient frontier of expected FCF and its risk in terms of its elasticity with respect to output. Findings The risk measure leads to efficient frontier between expected FCF and its idiosyncratic managerial risk. The model also resolves the empirical debate on the tradeoff between operating and financial leverages. Originality/value It is the first elasticity risk measure that embodied the impact of future level of capital expenditure, total level of assets and their sensitivity to random shocks in the product market.

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Hung, H. Y., Monica Chan, and Annie Yhi. "THE USEFULNESS OF CASH FLOW STATEMENTS." Asian Review of Accounting 3, no. 1 (January 1995): 92–104. http://dx.doi.org/10.1108/eb060653.

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