e-journal

Misclassifying cash flows from operations: intentional or not?

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Purpose – The purpose of this paper is to investigate the accuracy and informational quality of the cash from operations section of the cash flow statement. Design/methodology/approach – This paper empirically tested the accuracy of the cash from operations reported by Canadian non-financial companies. The authors studied 262 companies at three
different time periods providing 786 firm observations. For each observation, the balance sheet was used to confirm the figures reported in the statement of cash flows. In addition, the authors investigated management’s disclosure of the particular working capital items. Findings – The findings suggest that in recent years, companies are more likely to overstate their cash flow from operations, thereby presenting a better financial picture than is supported by the
balance sheet accounts. This would suggest that the investing or financing section would be correspondingly understated. The presence of acquisitions reduces overstatements, which may be the result of more auditor presence.
Research limitations/implications – This paper extends previous research from documented single, isolated instances of cash from operations being misstated to include a significant sample with more generalizable findings. The data are Canadian which may limit the generalizability to other countries. Future research should address the extent to which financial analysts rely on the reported cash from operations figure. Practical implications – This preliminary study may have implications for financial analysts and others relying on the free cash flow figure. Originality/value – This study expands on previous research which has taken place only on a case-by-case basis.

Keywords Canada, Legitimacy theory, Accounting, Institutional theory, Cash flow from operations,Statement of cash flows

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Informasi Detail

Judul Seri

International Journal of Accounting and Information Management

No. Panggil

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Penerbit

: Emerald Group., 2014

Deskripsi Fisik

International Journal of Accounting and Information Management Vol. 22 No. 1, 2014 pp. 18-32

Bahasa

English

ISBN/ISSN

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Klasifikasi

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Tipe Isi

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Tipe Media

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Tipe Pembawa

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Edisi

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Subjek

AKUNTANSI

Info Detail Spesifik

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Pernyataan Tanggungjawab

Asmawati/Syahrial

Versi lain/terkait

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