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The joint information role of analysts’ cash flow and earnings forecasts
journal contribution
posted on 2021-03-01, 00:00 authored by S Dhole, Ferdinand GulFerdinand Gul, Sagarika MishraSagarika Mishra, A M PalWe study whether the relative magnitudes of analysts’ cash flow and earnings forecasts convey information about the persistence and value relevance of reported earnings. We find that reported earnings are likely to be more (less) persistent and value relevant when analysts forecast relatively moderate (extreme) levels of operating cash flows, relative to earnings. We also find that the market’s response to a given earnings surprise is the strongest for moderate levels of cash flow forecasts relative to earnings. The joint information role of analysts’ cash flow and earnings forecasts persists even after controlling for the absolute accruals in the model.
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Journal
Accounting and financeVolume
61Pagination
499 - 541Publisher
WileyLocation
Chichester, Eng.Publisher DOI
ISSN
0810-5391eISSN
1467-629XLanguage
engPublication classification
C1 Refereed article in a scholarly journal; C Journal articleUsage metrics
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