Abstract:
There is a lack of consistency in prior research about the incremental information content of cash flows beyond earnings and a rare of study focusing on cash flows data reported by the Cash flows statement, specifically the Quarterly Cash flows statement. Thus, the present study emphasizes on the firms’ characteristics as the determinants enforcing on the incremental information content of quarterly reported cash flows over quarterly reported earnings by providing the evidence from the Stock Exchange of Thailand. The firms’ characteristics examined in this study are transitory of earnings, firm types (namely growth and value firms), and CFI/CFF ratio. The multiple regression models are applied to test of the incremental information content, which is defined as the association between cumulative abnormal stock returns (CAR) and (unexpected) accounting numbers surrounding the announcements of financial statements. Theses indicate that accounting numbers convey useful information in stock pricing to the market. This study also examines the interaction effect of those three factors and the industry effect; however, excluding of financial and insurance industries. The results indicate that reported cash flows convey relevant information in excess of reported earnings to the market. The earnings transitory reduce the informativeness of earnings but not increase the incremental information content of cash flows over earnings. Further, there is the evidence of the impact of the CFI/CFF ratio on the incremental information content of cash flows beyond earnings. There is no evidence of the impact of stock types. In addition, these firms’ characteristics jointly effect on tire informativeness of earnings and cash flows and tire industry effect are found as well.
