Disaggregating Cash Flows: The Effect of Linking and Labeling on Investors' Understanding of the Statement of Cash Flows

• 成果类型: Article; Early Access
• 署名作者: Crandall, Richard; Garavaglia, Shannon; Mongold, Cassie
• 署名单位: University of Illinois System; University of Illinois Urbana-Champaign; Pennsylvania Commonwealth System of Higher Education (PCSHE); University of Pittsburgh
• 刊物名称: JOURNAL OF ACCOUNTING RESEARCH
• ISSN/ISSBN: 0021-8456; 1475-679X
• DOI: 10.1111/1475-679x.70081
• 发表日期: 2026-08-06
• 关键词: financial reporting; Cash flows; accruals; labeling; financial-statement; earnings; RISK

摘要

Operating cash flows are a critical input to valuation activities. Research and practice indicate that the most common method of presenting operating cash flows, the indirect method, is viewed as overly complex. We experimentally examine whether two theoretically motivated factors represent shortcomings of the indirect method: (1) inadequate linking of related components of net income and changes in working capital accounts, and (2) inconsistent income statement labeling between components of net income and their corresponding working capital changes. Drawing on causal reasoning theory, we predict and find that these factors hinder the decision usefulness of the operating section of the statement of cash flows. The results of our study are informative to the academic literature and standard setters, as we examine underlying reasons why the indirect method may be viewed unfavorably.