Abstract
According to a recent conjecture in the literature, earnings have become a poorer proxy for cash flow from operations over time. We find that since 1988, when cash flow statements started to be consistently reported in Compustat, the cash effectiveness of earnings has actually increased for a large sample of US manufacturing firms. This occurs despite the introduction of fair value accounting and increasing accounting accruals during the last three decades. Also contrary to the conjecture, using more comprehensive measures of cash flow does not restore the investment-cash flow sensitivity, which continues to be around 0.05 in more recent periods.
| Original language | English |
|---|---|
| Publication status | Published - 2017 |
| Event | Financial Management Association Annual Meeting 2018 - San Diego Duration: 2018 Oct 10 → 2018 Oct 13 |
Conference
| Conference | Financial Management Association Annual Meeting 2018 |
|---|---|
| City | San Diego |
| Period | 2018/10/10 → 2018/10/13 |
Subject classification (UKÄ)
- Business Administration