Earnings, cashflows and returns: Functional relations and the impact of firm size

Article Abstract:

A re-evaluation of the accounting research debate over incremental information content and its value in cash flow management is presented. Empirical evidence to data had documented low relevance for the relation between stock returns, earnings and cashflows, but innovations in research design such as specification of non-linear functional relations among accounting variables and prices produce several new findings. Nonlinear functional relations are found to provide greater explanatory power for earnings and cashflows; the conventional model indicating transitory earnings components is valid for smaller firms, but cashflows add explanatory power for larger firms.

Management, Cash management, Growth companies

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The impact of shre price on seasonality and size anomalies in Australian equity returns

Article Abstract:

A study hypothesizing that well-documented size anomalies in which a firm's stock price does not correlate with market capitalization may mask a share-price effect is presented. A regression model is used to estimate separate effects of firm size and share price on returns in a chosen sample of Australian equity portfolios. Firm size and share price are found to have significant and largely independent effects on returns averaged overall months, and familiar negative relation between size and returns carries across months. Relation between size and returns is negative in July, neutral in January and positive across all other months.

Securities prices, Economic aspects, Securities industry

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Valuation-based accounting research: implications for financial reporting and opportunities for future research

Article Abstract:

A discussion of recent research into financial reporting and its practical applications in valuation-based accounting is presented. A number of alternative approaches are summarized along with findings relating to fair value accounting for various types of assets, cash flows versus accruals, recognition versus disclosure and harmonization of accounting standards across international boundaries. Directions in future research are also discussed.

Methods, Financial services industry, Financial services, Reports, Report writing

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