The Use of Earnings and Cash Flows in Investment Decisions in the U.S. and in Mexico: Experimental Evidence

2009 ◽  
Author(s):  
Jose Eduardo Miranda-Lopez ◽  
Linda M Nichols
Keyword(s):  
Experimental Evidence ◽  
Investment Decisions ◽  
Cash Flows ◽  
The U.S

Equity Values and Prediction of Earnings with Disaggregation of Earnings in India

2018 ◽  
Vol 21 (4) ◽  
pp. 990-1010
Author(s):  
Pooja Kumari ◽  
Chandra Sekhar Mishra
Keyword(s):  
Information Structure ◽  
Emerging Market ◽  
Investment Decisions ◽  
Cash Flows ◽  
Relative Performance ◽  
Equity Values ◽  
Individual Industry ◽  
Linear Information ◽  
Aggregate Earnings

This article examined the relative performance of aggregated and disaggregated earnings for valuation of equity and prediction of earnings in India. We measured three levels of earnings disaggregation: aggregate earnings, total accruals and cash flows, and four major constituents of accruals, then we estimated pooled as well as individual industry-wise regressions. We adopted Barth, Beaver, Hand and Landsman’s (1999, Review of Accounting Studies, 4(3, 4), 205–229; 2005, Journal of Accounting, Auditing & Finance, 20(4), 311–345) linear information structure grounded on generalized version of Ohlson (1999) model. We compared our results with the studies based on developed market. Our findings say that aggregated earnings and its disaggregated components are value relevant, and the adjusted R-squares of every next disaggregated systems are higher than aggregated systems, but in varying range across industries. We also find that the investors are not capable of judging total accruals and cash flows separately for investment decisions in this emerging market.

Income Conservatism in the U.S. Technology Sector

2011 ◽  
Vol 25 (2) ◽  
pp. 285-314 ◽  
Author(s):  
Uday Chandra
Keyword(s):  
Financial Statements ◽  
Cash Flows ◽  
Data Availability ◽  
Financial Statement ◽  
Litigation Risk ◽  
Technology Sector ◽  
Technology Firms ◽  
Conservative Accounting ◽  
Accounting Accruals ◽  
The U.S

SYNOPSIS I investigate the extent and nature of income conservatism in the financial statement numbers of firms in the U.S. technology sector. Technology firms are predicted to have greater income conservatism than other U.S. firms because they are subject to both higher shareholder litigation risk and conservative accounting standards such as SFAS 2. In the absence of a generally accepted measure of conservatism, I examine several proxies, including loss incidence and accounting rates of return, operating cash flow and nonoperating accrual levels, and regression coefficients from the earnings-return model in Basu (1997). Relative to other companies, technology firms' earnings are characterized by higher (and intertemporally increasing) levels of both conditional and unconditional conservatism. These differences are both statistically and economically significant. Further analysis suggests that technology firms' higher conservatism results primarily from lower operating cash flows due to R&D expensing and more income-decreasing accounting accruals linked to litigation risk. The results of this study are potentially useful to financial analysts, researchers, regulators, managers, and other users of financial statements. Data Availability: Data are available from public sources.

scholarly journals Empirical Evidence On The Valuation Of Financial Information In France

2010 ◽  
Vol 9 (3) ◽  
Author(s):  
Melita Stephanou-Charitou ◽  
Adamos Vlittis
Keyword(s):  
Financial Analysts ◽  
Investment Decisions ◽  
Cash Flows ◽  
Financial Information ◽  
Major Research ◽  
French Firm ◽  
First Results ◽  
Financial Scandals ◽  
Credit Financing

We propose and examine empirically the role of financial information; namely, earnings and cash flows in France.  The dataset consists of more than 1,000 French firm-year observations over a ten-year period. Regression analysis is undertaken to test the major research hypotheses.  The major conclusions drawn from the empirical results are summarized as follows.  First, results indicate that both earnings and cash flows are taken into consideration by French investors in their investment decisions.  Second, given cash flows, results show that earnings are always very important to investors and financial analysts for investment purposes.  However, results reveal that investors in France place much more attention to earnings and less attention to cash flows. In summary, the evidence provided in this study supports that indeed there are substantial differences in the way investors and financial analysts perceive financial information, such as earnings and cash flows in France.  The results of this study should be of great importance to the major stakeholders, such as investors, creditors and financial analysts, especially after the latest financial scandals and collapses of giant organizations worldwide.  Furthermore, these results support that fundamental analysis plays a very important role in the capital markets and it should be taken more seriously into consideration by the stakeholders for investing, credit, financing and valuation analysis purposes.

Logistics at Sytel Company

2013 ◽  
pp. 1-3
Author(s):  
Samir K Barua
Keyword(s):  
Investment Decisions ◽  
Cash Flows ◽  
Financial Evaluation ◽  
Management Decisions

Management decisions require concepts, frameworks, and techniques to be applied from several functions and disciplines simultaneously to find solutions. The case illustrates the application of optimization along with financial evaluation of investment decisions, to a decision on warehousing facing Sytel. The case identifies the elements of cash flows that are relevant for decisions pertaining to the setting up of warehouses. The instructor can make changes in the figures provided in the case to broaden the scope of understanding that can be imparted through the case.

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