The effect of cash flow forecasts on accrual quality and benchmark beating

• 成果类型: Article
• 署名作者: McInnis, John; Collins, Daniel W.
• 署名单位: University of Iowa; University of Texas System; University of Texas Austin
• 刊物名称: JOURNAL OF ACCOUNTING & ECONOMICS
• ISSN/ISSBN: 0165-4101
• DOI: 10.1016/j.jacceco.2010.10.005
• 发表日期: 2011
• 关键词: earnings management; INFORMATION; incentives; performance; tests; real

摘要

When analysts provide forecasts of both earnings and operating cash flow, they also implicitly provide a forecast of total operating accruals. We posit that this increases the transparency and the expected costs of accrual manipulations used to manage earnings. As a consequence, we predict and find that accrual quality improves and firms' propensity to meet or beat earnings benchmarks declines following the provision of cash flow forecasts. We also predict and find that firms turn to other benchmark-beating mechanisms, such as real activities manipulation and earnings guidance in response to the provision of cash flow forecasts. (C) 2010 Elsevier B.V. All rights reserved.