Are analysts' cash flow forecasts associated with improved earnings quality? Australian evidence

Coulton, JJ; Saune, N; Taylor, SL

Are analysts' cash flow forecasts associated with improved earnings quality? Australian evidence

Coulton, JJ Saune, N Taylor, SL

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Publisher:: Elsevier BV
Publication Type:: Journal Article
Citation:: Pacific Basin Finance Journal, 2022, 73, pp. 101758
Issue Date:: 2022-06-01

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Field	Value	Language
dc.contributor.author	Coulton, JJ
dc.contributor.author	Saune, N
dc.contributor.author	Taylor, SL
dc.date.accessioned	2022-11-14T02:51:02Z
dc.date.available	2022-11-14T02:51:02Z
dc.date.issued	2022-06-01
dc.identifier.citation	Pacific Basin Finance Journal, 2022, 73, pp. 101758
dc.identifier.issn	0927-538X
dc.identifier.uri	http://hdl.handle.net/10453/163432
dc.description.abstract	We investigate the extent to which the provision by sell side analysts of cash flow forecasts incremental to earnings forecasts has an impact on the quality of Australian firms' financial reporting. Using three separate and distinct indicators of earnings quality, we consistently fail to find evidence of any improvement in the quality of financial reporting following analysts' provision of cash flow forecasts. There is some evidence that the impact on earnings quality is driven by the proportion of mining firms on the Australian Securities Exchange. Our results contrast with the argument by Healy and Palepu (2001) that sell side analysts play an important role in monitoring the quality of financial reporting but are consistent with the claim that sell side analysts' cash flow forecasts lack sophistication (Givoly et al., 2009).
dc.language	en
dc.publisher	Elsevier BV
dc.relation.ispartof	Pacific Basin Finance Journal
dc.relation.isbasedon	10.1016/j.pacfin.2022.101758
dc.rights	info:eu-repo/semantics/closedAccess
dc.subject	1501 Accounting, Auditing and Accountability, 1502 Banking, Finance and Investment
dc.subject.classification	Finance
dc.title	Are analysts' cash flow forecasts associated with improved earnings quality? Australian evidence
dc.type	Journal Article
utslib.citation.volume	73
utslib.for	1501 Accounting, Auditing and Accountability
utslib.for	1502 Banking, Finance and Investment
pubs.organisational-group	/University of Technology Sydney
pubs.organisational-group	/University of Technology Sydney/Faculty of Business
pubs.organisational-group	/University of Technology Sydney/Faculty of Business/Accounting Discipline
utslib.copyright.status	closed_access	*
dc.date.updated	2022-11-14T02:50:56Z
pubs.publication-status	Published
pubs.volume	73

Abstract:

We investigate the extent to which the provision by sell side analysts of cash flow forecasts incremental to earnings forecasts has an impact on the quality of Australian firms' financial reporting. Using three separate and distinct indicators of earnings quality, we consistently fail to find evidence of any improvement in the quality of financial reporting following analysts' provision of cash flow forecasts. There is some evidence that the impact on earnings quality is driven by the proportion of mining firms on the Australian Securities Exchange. Our results contrast with the argument by Healy and Palepu (2001) that sell side analysts play an important role in monitoring the quality of financial reporting but are consistent with the claim that sell side analysts' cash flow forecasts lack sophistication (Givoly et al., 2009).

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http://hdl.handle.net/10453/163432