Alternative measure of financial development and investment-cash flow sensitivity:evidence from an emerging economy

This study examines the impact of financial development on corporate investment in terms of their influence on financing constraints.This study also tries to find the effect of financial development on the investment-cash flow sensitivity across the size,degree of financial constraints and group affiliation of the firm.This study employs dynamic panel data model or more specifically system generalized method of moments(GMM)estimation technique.The estimation results reveal that cash flow affects the investment decision of the company positively,which implies that Indian firms are financially constrained.Also,we observe that financial development reduces the investment-cash flow sensitivity and the effect of financial development is more prominent for small size and standalone firms.The results are robust across the period and,for both financially constrained and unconstrained firms.This study contributes to the existing literature by analyzing the impact of financial development on the role of cash flow in determining investments undertaken by the Indian firms,which is an unexplored issue from an emerging market perspective.

Financial reporting of cash flow： Arbitrary items and management preferences

The international financial reporting standard for cash flow statement （IAS 7） provides options for the classification of certain cash flow items （arbitrary items）. Therefore, business firms may classify the arbitrary items using the option that would maximize their own interest. This reduces the comparability of financial statements amongst business firms. This study aims to investigate the factors explaining management preferences in the selection of financial reporting practices on the arbitrary cash flow items. It concludes that managers tend to magnify the CFO reported in order to maximize the shareholders＇ wealth, which in turn would maximize their compensation. Managers of business firms with a relatively smaller size of CFO tend to classify interest paid and dividends paid as non-CFO in order to magnify their CFO. They also tend to classify interest received as CFO in order to inflate their relatively smaller size of CFO up to expectation. Similarly, managers of business firms with a relative larger size of dividends paid would classify the dividends paid outside CFO.

Financial frictions and the cash flow – external financing sensitivity: evidence from a panel of Pakistani firms

This paper uses a large panel of Pakistani non-financial firms over the period 2000-2013 to examine the role of financial constraints in establishing the relationship between cash flow and external financing.The results reveal that there exists a negative and significant relationship between external financing and cash flow.The finding of the substitutionary relation between internal funds availability and external financing has been viewed as evidence supporting the pecking order theory of capital structure.Yet,we show that this negative relationship is weak in case of financially constrained firms.We also analyze how credit multiplier affects external financing decisions of financially constrained and unconstrained firms.The results show that for financially unconstrained firms,the negative sensitively of external financing increases with asset tangibility.However,for financially constrained firms,the negative sensitivity of external financing to cash flow either decreases or turns positive as the tangibility of assets increases.This finding implies that financially constrained firms benefit more from investing in tangible assets because such assets not only help relax financial constraints but also having a potential to be a direct source of funds in periods of negative cash flow shocks.

An empirical study on information content of accounting earnings and cash flow

Based on deep analyzing the colluding and checking relation of income statement and cash flow statement, this paper chooses and designs the corresponding profit index, carries on the comparative study of information content between accounting earnings and cash flows. The paper utilizes the financial data of Chinese listed company in manufacturing industry from 2003 to 2005, adopts the price model and analyzes empirical study about two kinds of profit indexes and value relevance. Studies have suggested： accounting earnings and cash flows all have relevant relations to stock prices; however, the relevance between cash flow and stock price is stronger, and cash flows have higher information quality.

The Impact of Carbon Emissions on Asset Values and Operating Cash Flows： Evidence From Australian Listed Companies

In November 2011, the Australian government approved the legislation （Clean Energy Act 2011） to introduce a reduction plan of carbon emissions in Australia. This plan will be implemented from July 2012. This is one of the first accounting studies to investigate the potential impacts of this plan on long-lived asset values and operating cash flows for Australian listed companies. A sample of Australian Securities Exchange （ASX） 200 indexed companies from 2＇006 to 2010 is used. Hypotheses are tested based on Heckman＇s （1979） two-stage approach. Three regression models are developed to examine the association between carbon emissions and asset values/operating cash flows. This study finds that asset values and operating cash flows will be adversely affected, if the reduction plan is implemented. Specifically, this study finds that the book value of long-lived assets will decrease, if listed companies are considered to be emissions-liable. The book value of long-lived assets is further found to be negatively associated with listed companies＇ carbon emission levels. This study also demonstrates that operating cash flows of emissions-liable companies will be adversely affected. However, this study does not find a relationship between operating cash flows and companies＇ emission levels. The empirical findings from Australian listed companies provide the evidence that the reduction plan of carbon emissions will adversely affect corporate entities＇ asset values and operating cash flows. The results further indicate that the magnitude of the impact will be proportional to the companies＇ emission levels. The implications of these empirical findings for listed companies, for the accounting profession, and for carbon emission regulators are also discussed.

Evaluation of the asset＇s value by using fuzzy two-stage discounted cash flow model

This paper establishes the fuzzy discounted cash flow model to settle the uncertainties of the cash flow and discount rate in two-stage DCF model, to take the imprecise of the time period of the supernormal growth phase with considering the investor＇s attitude to risk. Firstly, the discount rate and the growth rate are fuzzified as triangular fuzzy numbers in this fuzzy discounted cash flow model. Then the intrinsic value of an asset can be evaluated by the arithmetic operation on interval and λ- signed distance method under the framework of DCF approach. Finally, a listed company at Shanghai Stock Exchange is analyzed as the case to demonstrate the process of stock value calculation by the fuzzy discounted cash flow model.

Continuing Value Calculation with Discounted Cash Flows Method： An Application Example for Tekart Tourism Establishment Whose Shares Are Dealt in Istanbul Stock Exchange

Valuation is stated as monetary value belonging to firm assets （Verginis ＆ Taylor, 2004）. According to M. L. Rock, R. H. Rock, and Sikora （1994）, valuation is the answer of the following questions： What is the maximum price that will be paid for the firm？ What are the risk areas？ What are the results of cash flows, profitability, and balance-sheet？ Chambers （2005, p. 5）, on the other hand, estimated a probable price that will be paid for the goods and service at a specific time. For the calculation of continuing value （CV）, Verginis and Taylor （2004） used discounted cash flows （DCF） method and Onal, Karadeniz, and Kandlr （2005） used economic profit method. Klrh （2005） suggested Continuous and Constant Growing Model （Gordon Model）, Value Driver Model, and Economic Profit Model. In this study, DCF which is suggested by Onal et al. （2005） and Verginis and Taylor （2004） is used for the aim of determining CV of the firm at issue. In this study, analyses are made by using the financial statement data of a tourism business whose shares are dealt in Istanbul Stock Exchange. In consequence of the calculations, CV of the examined firm is found to be 7,485,402 TL and firm value is found to be 15,195,366 TL.

Empirical Research on Accounting Profits and Net Cash Flow of Chinese Public Companies ——Analysis Based on Profitability

In traditional analysis, enterprises＇ performance evaluation largely depends on profits indices, which results in the public companies＇ strong pursuit of accounting profits and neglect of net cash flow. It is of great significance to study this phenomenon in public companies for it can help to evaluate their profitability correctly. By making an empirical research on the status quo of the medical public companies＇ accounting profits, net cash flow, receivable and prepaid items, it is found that the phenomenon that the current accounting profits and net cash flow are inconsistent universally exists in the public companies; the current growth rates of accounts receivable, notes receivable, other accounts receivable and accounts prepaid in the companies which the phenomenon exists in are higher than those in other companies and the industrial average, especially for the latter two items; this phenomenon in economically developed areas is more obvious than in other areas. How to avoid the contradiction of accounting profits and net cash flow in the public companies？ Firstly, the credit risk awareness and management should be strengthened. Secondly, cash budget management should be enhanced. Finally, the index system of evaluation of the public companies＇ operating performance should be improved.

Prediction Ability of Cash Flows, Net Income （NI）, and Auditors

The accounting information should help investors and creditors evaluate the amounts, timing, and uncertainty of firms＇ future cash receipts and disbursements. The Financial Accounting Standards Board （FASB） contends that accrual-based historical earnings are superior to cash flows in predicting future cash flows. But, Bowen, Burgstahler, and Daley （1986） showed that traditional measures of cash flows （net income （NI） plus depreciation and working capital from operations） appear to be better predictors of future cash flows than accrual accounting earnings. Since then, many researchers have articulated the importance of accounting data, especially cash flows and NI, in the predictive and forecasting processes. In this study, we empirically re-examined the ability of cash flows from operating activities （CFO） and accrual-based NI in predicting firms＇ bankruptcy. In the past, the results of this type of research were mixed. Differently from previous research, we focus on the timing of predictive ability, i.e., which indicator, cash flows or NI, is faster in predicting a firm＇s bankruptcy. We also investigate the timing of auditors＇ issuance of a going-concern opinion. The preliminary results show that the accrual-based NI is more accurate and faster than either CFO or audit opinion in predicting firms＇ failures. On average, NI signals a firm＇s bankruptcy 2.41 years before the bankruptcy filing, while CFO signals 1.48 years before filing. Auditors issued a going-concern opinion, another signal for firms＇ failure, to only 16 out of 41 bankrupt firms one year before bankruptcy, and no auditor issued the going-concern opinion two years before bankruptcy.

Cash Flow from Operations, Accruals and Earnings Persistency

Persistency of earnings is an important measure of eamings quality. It is generally accepted that the more the persistency is, the higher the quality of earnings is. We analyze the characteristic factors influencing earnings persistency, use data of A-share listed companies during 1998-2004, and find that earnings persistency is significantly related to the nature of earnings, the cash content of earnings and the quality of accruals.

Governance Structure, Surplus Free Cash Flow （SFCF）, and Earnings Quality： Evidence From Malaysia＊

Prior researches focus mainly on the relationship between governance structure and earnings quality. Unlike the previous researches, this study attempts to empirically examine the role of surplus free cash flow （SFCF） as a moderator in the relationship with the new requirements of Malaysian code on corporate governance （MCCG）. By using the estimated generalized least square （EGLS） upon a sample of Malaysian firms, the results show that firms with an independent chairman experience persistent earnings numbers. The results also demonstrate that the current earnings of finns with small boards and independent audit committee members are more likely to persist in the future, when SFCF is high. However, in contradiction to the authors＇ expectation is the significant, but negative and interactive effect of current earnings and audit committee competence on earnings persistence. The findings, though disappointing, suggest investors to consider both the governance structure and free cash flow （FCF） agency problem when evaluating the sustainability of firms＇ earnings. They also call for more independent directors, effective meetings, and more competent audit committee members.

The Effect of Net Working Capital on Jordanian Industrial and Energy Sectors＇ Net Cash Flows Employed in Operating Activities

The primary objective of the cash flow statement is to provide useful, meaningful, and relevant information about the cash receipts and cash payments of a firm during a given period of time. Decision makers can achieve extra features of the change in net assets, the firms＇ financial position （liquidity and solvency）, and the firm＇s ability to adapt to changing circumstances by affecting the amount and timing of cash flows. Cash flow statements improve comparability as they are not affected by differing accounting policies used for the same type of transactions or events. This study aims to verify the effect of net working capital （NWC）, as an indicator of a company＇s short-term liquidity or its ability to meet short-term obligations, on Jordanian industrial and energy sectors＇ net operating cash flows （NOCF）. A simple liner regression is used to test a period of 2008-2011 in order to conclude the extent of the effect on industrial and energy sectors. The study showed that there is a significant effect of the independent variable NWC on the dependent variable NOCF among industrial and energy sectors in Jordanian market. Whereas the adjusted R-squared of test is 0.854, changes in NOCF in Jordanian industrial and energy sectors have been described by NWC. Also, the study reached that the utilities and energy sector has the lowest NWC, while the mining and extraction sector has the highest. And, electrical industries sector has the lowest NOCF, while the mining and extraction sector has the highest. Moreover, the study showed that the printing and packaging sector has the lowest NWC, while the mining and extraction sector has the highest. And, glass and ceramic industries sector has the lowest NOCF, while the utilities and energy sector has the highest.

The Variance Analysis on Enterprise of Different Ways of Sales：Based on Analysis of Enterprise Tax Burden and Cash Flows

在目前竞争激烈的市场经济环境中,许多企业为了维持或扩大自己商品的市场份额,往往采取多种多样的销售方式,以达到促销的目的,而且随着经济的发展以及互联网时代的来临,销售形式也越来越多.基于企业税负与现金净流量的基础上对9 种销售方式从企业税负与现金净流量两个方面进行了分析与研究.研究发现税负高的销售方式,可能其现金净流量也比较高,因此企业在经营销售过程中,不能只考虑税负的问题,还要考虑企业现金净流量的问题,甚至是企业的整体发展问题以及顾客对销售方式的接受程度.

Development of Supply Chain Finance, Financial Constraints and Cash Flow Sensitivity

This paper used the Chinese listing Corporation financial data （2003-2013） to study the relationship between the supply chain finance development, SME financing constraints and cash flow. The study found that the small and medium-sized enterprise has obvious cash flow sensitivity, explaining it is subjected to the larger financing constraints. The development of supply chain finance can alleviate the financing constraints of SMEs, but for large enterprises it is unable to play a corresponding role.

Construction and Empirical Research of Comprehensive Financial Analysis Index System Based on Cash Flowl

This paper first elaborates on the importance of cash flow in building a comprehensive financial indicator system.On one hand,it is the relationship between cash flow and the assessment of the company’s solvency,profitability,and operating ability.On the other hand,it is the theoretical basis of financial analysis based on cash flow.We then introduced the construction principles of the financial analysis index system based on cash flow,and lastly analyzed the financial data of Xiaomi for empirical research.

The Dynamic Analysis of the Cash Flows on ATM

Based on the time series of cash flows on ATM, the varying rule of withdrawal is analyzed. The model of autoregression and moving average is established by Matlab and the reliability is checked. According to the model, the cash flows on ATM are forecasted in the coming 10 days. It is important for banks to prepare the cash.

Urban Forest and Tree Valuation Using Discounted Cash Flow Analysis: Impact of Economic Components

Discounted cash flow analysis is one of the standard methods used to value urban forests and trees. It involves calculating today’s value for all benefits and costs attributed to an investment;that is discounting all cash flows to today’s value using an appropriate interest rate. This requires each benefit and cost be stated in terms of its cash flow. Urban tree benefits are complex. Little notice is given to the components of these benefits. Total urban tree benefits are a summation of partial benefits, including property value increase, storm water reduction, air quality improvement, carbon sequestration, natural gas savings, and electricity savings. We discuss the nature of these partial benefits, especially the geographical, temporal, diameter size, and rate of growth differences. These differences are even reflected in nursery stock valuation. Net present value analysis is used to illustrate the impact of these differences on financial return. An understanding of these components will prove valuable to those attempting to estimate urban forest and tree benefits.

Free cash flow productivity among Chinese listed companies:A comparative study of SOEs and non-SOEs

This paper investigates the free cash flow productivity of SOEs compared with non-SOEs and examines its possible determinants.We find that SOEs have slightly weak free cash flow productivity but significantly stronger than non-SOEs.Similar performance exists among commercial class I and II SOEs and public-benefit SOEs.Further analyses suggest that firm size,age,sales growth,ownership concentration,government subsidies,and industry monopoly factors cannot explain this phenomenon.The common driver for all types of SOEs to generate stronger free cash flows than non-SOEs is their stronger expense control capability.

Scheduling Multi-Mode Projects under Uncertainty to Optimize Cash Flows: A Monte Carlo Ant Colony System Approach

Project scheduling under uncertainty is a challenging field of research that has attracted increasing attention. While most existing studies only consider the single-mode project scheduling problem under uncertainty, this paper aims to deal with a more realistic model called the stochastic multi-mode resource constrained project scheduling problem with discounted cash flows （S-MRCPSPDCF）. In the model, activity durations and costs are given by random variables. The objective is to find an optimal baseline schedule so that the expected net present value （NPV） of cash flows is maximized. To solve the problem, an ant colony system （ACS） based approach is designed. The algorithm dispatches a group of ants to build baseline schedules iteratively using pheromones and an expected discounted cost （EDC） heuristic. Since it is impossible to evaluate the expected NPV directly due to the presence of random variables, the algorithm adopts the Monte Carlo （MC） simulation technique. As the ACS algorithm only uses the best-so-far solution to update pheromone values, it is found that a rough simulation with a small number of random scenarios is enough for evaluation. Thus the computational cost is reduced. Experimental results on 33 instances demonstrate the effectiveness of the proposed model and the ACS approach.