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The incremental information content of fund flow statements: A quarterly approach

Payyu Cheng, University of Nebraska - Lincoln

Abstract

This research examines the impact of funds information required in APB No. 19 and SFAS No. 95 on the financial market. To improve the deficiencies of previous research, this study uses a quarterly approach to examine the information content of each quarter. The event window for the period tested is reduced to at most three weeks, with the date that the SEC receives the company's 10Q and 10K or annual financial reports, whichever is received earlier, at the center of the window. The results indicate that the time series property of quarterly funds variables is different from that of quarterly accrual earnings. Furthermore, the time series of funds variables share some common properties such as relative invariable over time periods and statistical methods tested, and parsimoniousness of form. Other findings are that the information content of funds variables vary from quarter to quarter and that working capital measures have more significant impact on the financial market than cash flow measures. There are at least three features of this research not found in previous studies. First, it includes the required items in APB No. 19 and SFAS No. 95. Second, it investigates extensively the possible market expectation models including the models reported in accrual earnings and persistent earnings literature. Third, it examines the information content of funds data in each separate quarter.

Subject Area

Accounting

Recommended Citation

Cheng, Payyu, "The incremental information content of fund flow statements: A quarterly approach" (1990). ETD collection for University of Nebraska-Lincoln. AAI9118447.
https://digitalcommons.unl.edu/dissertations/AAI9118447

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