The Relative Information Content of Accruals and Cash Flows: Combined Evidence at the Earnings Announcement and Annual Report Release Date

1986 ◽  
Vol 24 ◽  
pp. 165 ◽  
Author(s):  
G. Peter Wilson
Keyword(s):  
Information Content ◽  
Annual Report ◽  
Cash Flows ◽  
Release Date ◽  
Earnings Announcement ◽  
Relative Information ◽  
Relative Information Content

The relative information content of cash flows and earnings affected by their extremity

2014 ◽  
Vol 40 (7) ◽  
pp. 646-661 ◽  
Author(s):  
Wael Mostafa
Keyword(s):  
Stock Returns ◽  
Information Content ◽  
Statistical Significance ◽  
Explanatory Power ◽  
Cash Flows ◽  
Content Type ◽  
Nested Models ◽  
Relative Information ◽  
Security Returns ◽  
Relative Information Content

Purpose – Many studies examine the relative information content of earnings and cash flows from operations. Most studies find that earnings have higher information content than cash flows. An interesting question that follows is whether these findings hold after controlling the extremity of earnings and cash flows. The purpose of this paper is to examine the relative information content of earnings and cash flows in the following four different cases: first, moderate earnings vs moderate cash flows, second, extreme earnings vs moderate cash flows, third, moderate earnings vs extreme cash flows, and fourth, extreme earnings vs extreme cash flows. Design/methodology/approach – To assess the relative information content of earnings and cash flows for each of the four cases mentioned above, the authors compare the explanatory power for regression of returns on unexpected earnings relative to regression of returns on unexpected cash flows. Therefore, the author compares the adjusted R2 of the model with earnings variables and the model with cash flows variables using Vuong's test, that examines the statistical significance of the difference between adjusted R2s of the rival (non-nested) models, and interpret a statistically higher adjusted R2 as an indicator for higher relative information content. Findings – The results show that: first, when both earnings and cash flows are moderate, earnings are more highly associated with stock market price changes than cash flows, second, when both earnings and cash flows are extreme, earnings also have greater relative information content than cash flows, third, when the extremity differs between earnings and cash flows, the moderate variable is superior to the other extreme variable in explaining security returns. These results suggest that earnings are definitely more value relevant than cash flows. However, only in cases when cash flows from operations are moderate and earnings are extreme, cash flows possess higher information content than earnings. Practical implications – The explanatory power for stock returns will be higher for earnings or cash flows depending on which is more highly persistent. This result reverses the conventional finding of the superiority of earnings over cash flows in explaining security returns. Originality/value – In contrast to previous studies, the authors control for the extremity of earnings and cash flows when evaluating the relative information content of earnings and cash flows from operations.

scholarly journals The relative information content of audited and unaudited financial data releases

1987 ◽  
Vol 18 (2) ◽  
pp. 61-64 ◽  
Author(s):  
R. F. Knight ◽  
J. F. Affleck-Graves
Keyword(s):  
Information Content ◽  
Preliminary Report ◽  
Annual Report ◽  
Stock Exchange ◽  
Financial Data ◽  
Significant Information ◽  
Johannesburg Stock Exchange ◽  
Relative Information ◽  
Incremental Information ◽  
Relative Information Content

This article reports the results of a study which empirically investigates the relative information content of the three statutory reports required in terms of the Companies Act (1973) (viz. the interim report, the preliminary report and the annual report) in the context of the Johannesburg Stock Exchange. The relative information content of audited and unaudited data releases was likewise evaluated in this setting. The results presented indicate that the three statutory reports referred to each have significant information content although the PR appears to have a significantly larger information content than the others. Surprisingly, audited data do not appear to have a significantly different information content than unaudited data. A possible explanation which is tentatively offered is that audited data releases tend to be far less timely than unaudited data releases and this feature may result in a decaying of the former's incremental information content, if indeed any exists.

scholarly journals Perbandingan Pengaruh Laba dan Value Added pada Return Saham

2019 ◽  
pp. 1038
Author(s):  
Gentha Putri Wardana ◽  
Dewa Gede Wirama
Keyword(s):  
Stock Returns ◽  
Information Content ◽  
Stock Exchange ◽  
Economic Value ◽  
Value Added ◽  
Theoretical Implication ◽  
Performance Measure ◽  
Company Performance ◽  
Relative Information ◽  
Relative Information Content

The information of value added is considered to be a better company performance measure and has better association on stock returns compared to earning information that is often used. This study aims to compare the relative information content of earnings and value added in explaining stock returns. This research conducted on all companies listed on the Indonesia Stock Exchange in 2013-2017. 308 samples were taken using random sampling method. The data analysis technique was simple linear regression. It was found that EVA and FVA as proxies of value added outperformed earnings. EVA is also found to be more associated with stock returns compared to FVA. The theoretical implication is in addition to references to further research regarding company performance measurement and stock returns. The practical implications is a matter of consideration for investors to make investment decisions and reference for corporate in financial decision making according to preferences of shareholders. Keywords: Earning, economic value added, financial value added, stock return, relative information content  

Document lattices

2014 ◽  
Author(s):  
C. M. Sperberg-McQueen ◽  
Yves Marcoux ◽  
Claus Huitfeldt
Keyword(s):  
Information Content ◽  
Information Loss ◽  
Markup Language ◽  
Relative Information ◽  
Large Lattice ◽  
Relative Information Content

If the information conveyed by the markup in a document can be identified with the set of inferences we can draw from that markup, as has been proposed in earlier work, then the sets of inferences licensed by documents form an infinitely large lattice, by means of which the relative information content of any two documents (equivalence, subsumption, contradiction, consistency) can be displayed visually. The sets of inferences licensed by markup can be used to test translations from one markup language to another for equivalence or information loss; a simple example using XHTML and CALS table markup illustrates the process.

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