The value-relevance of cash flows and accruals: The role of investment opportunities

被引：30
|
作者：
Kumar, Krishna R. [1 ]
Krishnan, Gopal V. [2 ]
机构：
[1] George Washington Univ, Washington, DC 20052 USA
[2] Lehigh Univ, Bethlehem, PA 18015 USA
来源：
ACCOUNTING REVIEW | 2008年 / 83卷 / 04期
关键词：
capital markets; investment opportunities; earnings; cash flows from operations; accruals; value-relevance;
D O I：
10.2308/accr.2008.83.4.997
中图分类号：
F8 [财政、金融];
学科分类号：
0202 ;
摘要：
We examine the role of investment opportunities as a determinant of the relative importance of cash flows from operations (CFO) and accruals in firm valuation. We find that at low investment-opportunity levels, CFO value-relevance increases with investment opportunities. When investment opportunities are high, accrual value-relevance declines as investment opportunities increase. Consequently, earnings value-relevance first varies directly and then inversely with investment opportunities. We show that the increase in CFO value-relevance is consistent with cost differentials between internal and external financing causing CFO to be an increasingly important determinant of the realization of investment opportunities. The decline in accrual value-relevance at high investment-opportunity levels appears to be attributable to accounting measurement deficiencies.
引用
收藏
页码：997 / 1040
页数：44
相关论文
共 50 条
  • [31] Numerical Approximation of a Cash-Constrained Firm Value with Investment Opportunities
    Pierre, Erwan
    Villeneuve, Stephane
    Warin, Xavier
    [J]. SIAM JOURNAL ON FINANCIAL MATHEMATICS, 2017, 8 (01): : 54 - 81
  • [32] The relevance of the value-relevance literature for financial accounting standard setting
    Holthausen, RW
    Watts, RL
    [J]. JOURNAL OF ACCOUNTING & ECONOMICS, 2001, 31 (1-3): : 3 - 75
  • [33] Further evidence of the relationship between accruals and future cash flows
    Farshadfar, Shadi
    Monem, Reza M.
    [J]. ACCOUNTING AND FINANCE, 2019, 59 (01): : 143 - 176
  • [34] An Examination of the Effects of Investor Sophistication on the Pricing of Accruals and Cash Flows
    Barone, Gerhard
    Magilke, Matthew
    [J]. JOURNAL OF ACCOUNTING AUDITING AND FINANCE, 2009, 24 (03): : 385 - 414
  • [35] Classification and market pricing of the cash flows and accruals on trading positions
    Ryan, SG
    Tucker, JW
    Zarowin, PA
    [J]. ACCOUNTING REVIEW, 2006, 81 (02): : 443 - 472
  • [36] Value relevance of earnings and cash flows during the global financial crisis
    Bepari, Md Khokan
    Rahman, Sheikh F.
    Mollik, Abu Taher
    [J]. REVIEW OF ACCOUNTING AND FINANCE, 2013, 12 (03) : 226 - +
  • [37] The Value-Relevance of the New Chinese Accounting Standards
    Xue Shuang
    Xiao Ze-zhong
    [J]. 2008 INTERNATIONAL CONFERENCE ON MANAGEMENT SCIENCE & ENGINEERING (15TH), VOLS I AND II, CONFERENCE PROCEEDINGS, 2008, : 1244 - +
  • [38] Implications of Firms Having Both Highly Negative Accruals and Cash Flows for Test of Accruals Anomaly
    Kim, Jung Hoon
    Kim, Young Jun
    [J]. ACCOUNTING HORIZONS, 2017, 31 (01) : 1 - 22
  • [39] Accruals, cash flows and the post-earnings-announcement drift
    Shivakumar, L
    [J]. JOURNAL OF BUSINESS FINANCE & ACCOUNTING, 2006, 33 (1-2) : 1 - 25
  • [40] The Impact of Recession on the Value-relevance of Accounting Information
    Kane, Gregory D.
    Leece, Ryan D.
    Richardson, Frederick M.
    Velury, Uma
    [J]. AUSTRALIAN ACCOUNTING REVIEW, 2015, 25 (02) : 185 - 191
12345