IDEAS home Printed from https://ideas.repec.org/a/apa/ijbaas/2020p265-274.html
   My bibliography  Save this article

The Impact of Earnings Persistence on the Operating Cash Flows with Emphasis on Financial Constraints

Author

Listed:
  • Orman Hamedi Ilkhechi

    (Department of Accounting, Islamic Azad University, Ilkhchi, Iran)

  • Saeid Anvar Khatibi

    (Department of Accounting, Islamic Azad University, Ilkhchi, Iran)

Abstract

The purpose of this study is to investigate the effect of earnings stability on operating cash flows with emphasis on financial constraints. Evidence suggests that earnings stability has a positive and significant effect on operating cash flows, and financial constraints have a negative and significant effect on operating cash flows and also financial constraints do not have a significant interactive effect on the relationship between profit stability and operating cash flows. To measure operating cash flow, the cash flow from operating activity obtained through the cash flow statement is obtained by dividing the total assets of the company. The research is from 2012 to 2016 that a total of 121 companies active in various industries have formed the research sample. The method of the present research is descriptive-correlational in terms of applied purpose and post-event in terms of data collection method. Multivariate regression method has been used to test the research hypotheses. The independent variable in this study is profit stability and the dependent variable is operating cash flow and financial constraint as a moderating variable. The result is also supported by stakeholder theory. In general, the research findings show the important and prominent role of earnings stability in shaping the operating cash flow and its financial constraints.

Suggested Citation

  • Orman Hamedi Ilkhechi & Saeid Anvar Khatibi, 2020. "The Impact of Earnings Persistence on the Operating Cash Flows with Emphasis on Financial Constraints," International Journal of Business and Administrative Studies, Professor Dr. Bahaudin G. Mujtaba, vol. 6(5), pages 265-274.
    • Handle: RePEc:apa:ijbaas:2020:p:265-274
    DOI: 10.20469/ijbas.6.10004-5
    as

    Download full text from publisher

    File URL: https://kkgpublications.com/business-v6-i5-article-4/
    Download Restriction: no
    File URL: https://kkgpublications.com/wp-content/uploads/2020/10/ijbas.6.10004-5.pdf
    Download Restriction: no
    File URL: https://libkey.io/10.20469/ijbas.6.10004-5?utm_source=ideas
    LibKey link: if access is restricted and if your library uses this service, LibKey will redirect you to where you can use your library subscription to access this item
    ---><---

    References listed on IDEAS

    as
    1. Kormendi, Roger & Lipe, Robert, 1987. "Earnings Innovations, Earnings Persistence, and Stock Returns," The Journal of Business, University of Chicago Press, vol. 60(3), pages 323-345, July.
    2. Fama, Eugene F, 1970. "Efficient Capital Markets: A Review of Theory and Empirical Work," Journal of Finance, American Finance Association, vol. 25(2), pages 383-417, May.
    3. Erik Peek & Rick Cuijpers & Willem Buijink, 2010. "Creditors’ and Shareholders’ Reporting Demands in Public Versus Private Firms: Evidence from Europe," Contemporary Accounting Research, John Wiley & Sons, vol. 27(1), pages 49-91, March.
    4. Chou, De-Wai & Gombola, Michael & Liu, Feng-Ying, 2009. "Long-run underperformance following private equity placements: The role of growth opportunities," The Quarterly Review of Economics and Finance, Elsevier, vol. 49(3), pages 1113-1128, August.
    5. Iman Soukhakian & Mehdi Khodakarami, 2019. "Working capital management, firm performance and macroeconomic factors: Evidence from Iran," Cogent Business & Management, Taylor & Francis Journals, vol. 6(1), pages 1684227-168, January.
    6. Lakshmanan Shivakumar, 2010. "Discussion of Aggregate Market Reaction to Earnings Announcements," Journal of Accounting Research, Wiley Blackwell, vol. 48(2), pages 335-342, May.
    7. Erik Peek & Rick Cuijpers & Willem Buijink, 2010. "Creditors’ and Shareholders’ Reporting Demands in Public Versus Private Firms: Evidence from Europe," Contemporary Accounting Research, John Wiley & Sons, vol. 27(1), pages 2-2, March.
    8. Mahdi Salehi & Mahmoud Lari Dasht Bayaz & Shaban Mohammadi & Mohammad Seddigh Adibian & Seyed Hamed Fahimifard, 2020. "Auditors’ response to readability of financial statement notes," Asian Review of Accounting, Emerald Group Publishing Limited, vol. 28(3), pages 463-480, June.
    9. Cleary, Sean, 2006. "International corporate investment and the relationships between financial constraint measures," Journal of Banking & Finance, Elsevier, vol. 30(5), pages 1559-1580, May.
    10. Steven N. Kaplan & Luigi Zingales, 1997. "Do Investment-Cash Flow Sensitivities Provide Useful Measures of Financing Constraints?," The Quarterly Journal of Economics, President and Fellows of Harvard College, vol. 112(1), pages 169-215.
    11. Zunairoh & Fatkhurrohman, 2019. "Liquidity, leverage, and cash holding: Evidence from Indonesia listed real estate firms," Journal of Administrative and Business Studies, Professor Dr. Usman Raja, vol. 5(2), pages 79-87.
    Full references (including those not matched with items on IDEAS)

    Most related items

    These are the items that most often cite the same works as this one and are cited by the same works as this one.
    1. Guariglia, Alessandra, 2008. "Internal financial constraints, external financial constraints, and investment choice: Evidence from a panel of UK firms," Journal of Banking & Finance, Elsevier, vol. 32(9), pages 1795-1809, September.
    2. Ludovic Vigneron & Yves Mard, 2016. "Earnings management across publicly traded and privately held French SMEs," International Journal of Entrepreneurship and Small Business, Inderscience Enterprises Ltd, vol. 29(3), pages 416-440.
    3. Aydin Ozkan & Roberto J. Santillán‐Salgado & Yilmaz Yildiz & María del Rocío Vega Zavala, 2020. "What Happened To The Willingness Of Companies To Invest After The Financial Crisis? Evidence From Latin American Countries," Journal of Financial Research, Southern Finance Association;Southwestern Finance Association, vol. 43(2), pages 231-262, May.
    4. Fabio Bertoni & María Ferrer & José Martí, 2013. "The different roles played by venture capital and private equity investors on the investment activity of their portfolio firms," Small Business Economics, Springer, vol. 40(3), pages 607-633, April.
    5. Gaurav Gupta & Jitendra Mahakud, 2019. "Alternative measure of financial development and investment-cash flow sensitivity: evidence from an emerging economy," Financial Innovation, Springer;Southwestern University of Finance and Economics, vol. 5(1), pages 1-28, December.
    6. Fernando N. de Oliveira, 2014. "Investment of Firms in Brazil: do financial restrictions, unexpected monetary shocks and BNDES play important roles?," Working Papers Series 366, Central Bank of Brazil, Research Department.
    7. Gaurav Gupta & Jitendra Mahakud & Vivek Verma, 2020. "CEO's education and investment–cash flow sensitivity: an empirical investigation," International Journal of Managerial Finance, Emerald Group Publishing Limited, vol. 17(4), pages 589-618, December.
    8. Stropnik Neca & Korošec Bojana & Tominc Polona, 2017. "The Relationship Between the Intellectual Capital Disclosure and Cost of Debt Capital – A Case of Slovenian Private Audited Organisations," Naše gospodarstvo/Our economy, Sciendo, vol. 63(4), pages 3-16, December.
    9. Segarra Blasco, Agustí, 1958- & Teruel, Mercedes, 2010. "Are small firms more sensitive to financial variables?," Working Papers 2072/151623, Universitat Rovira i Virgili, Department of Economics.
    10. Henry Jarva & Matthijs Lof, 2024. "Identifying accounting conservatism in the presence of skewness," Review of Quantitative Finance and Accounting, Springer, vol. 62(2), pages 553-577, February.
    11. Patrick Musso & Stefano Schiavo, 2008. "The impact of financial constraints on firm survival and growth," Journal of Evolutionary Economics, Springer, vol. 18(2), pages 135-149, April.
    12. Bebchuk, Lucian A. & Cohen, Alma & Wang, Charles C.Y., 2013. "Learning and the disappearing association between governance and returns," Journal of Financial Economics, Elsevier, vol. 108(2), pages 323-348.
    13. José Manuel Mansilla-Fernández & Juliette Milgram-Baleix, 2023. "Working capital management, financial constraints and exports: evidence from European and US manufacturers," Empirical Economics, Springer, vol. 64(4), pages 1769-1810, April.
    14. Stijn Claessens & M Ayhan Kose, 2018. "Frontiers of macrofinancial linkages," BIS Papers, Bank for International Settlements, number 95.
    15. Mabel D. Costa & Ahsan Habib & Md. Borhan Uddin Bhuiyan, 2021. "Financial constraints and asymmetric cost behavior," Journal of Management Control: Zeitschrift für Planung und Unternehmenssteuerung, Springer, vol. 32(1), pages 33-83, March.
    16. repec:grz:wpsses:2020-04 is not listed on IDEAS
    17. Fabio Bertoni & Massimo G. Colombo & Annalisa Croce, 2010. "The Effect of Venture Capital Financing on the Sensitivity to Cash Flow of Firm's Investments," European Financial Management, European Financial Management Association, vol. 16(4), pages 528-551, September.
    18. Alexandru MINEA & Youssouf KIENDREBEOGO, 2012. "Financial Factors and Manufacturing Exports:Theory and Firm-level Evidence From Egypt," Working Papers 201221, CERDI.
    19. Zulkhibri, 2013. "Corporate Investment Behaviour and Monetary Policy: Evidence from Firm-level Data for Malaysia," Global Economic Review, Taylor & Francis Journals, vol. 42(3), pages 269-290, September.
    20. Inna Sousa Paiva, 2018. "Contracting debt and the quality of financial reporting in private firms," Contaduría y Administración, Accounting and Management, vol. 63(2), pages 33-34, Junio.
    21. Marianna SUCCURRO & Lidia MANNARINO, 2014. "The Impact Of Financial Structure On Firms’ Probability Of Bankruptcy: A Comparison Across Western Europe Convergence Regions," Regional and Sectoral Economic Studies, Euro-American Association of Economic Development, vol. 14(1), pages 81-94.

    Corrections

    All material on this site has been provided by the respective publishers and authors. You can help correct errors and omissions. When requesting a correction, please mention this item's handle: RePEc:apa:ijbaas:2020:p:265-274. See general information about how to correct material in RePEc.

    If you have authored this item and are not yet registered with RePEc, we encourage you to do it here. This allows to link your profile to this item. It also allows you to accept potential citations to this item that we are uncertain about.

    If CitEc recognized a bibliographic reference but did not link an item in RePEc to it, you can help with this form .

    If you know of missing items citing this one, you can help us creating those links by adding the relevant references in the same way as above, for each refering item. If you are a registered author of this item, you may also want to check the "citations" tab in your RePEc Author Service profile, as there may be some citations waiting for confirmation.

    For technical questions regarding this item, or to correct its authors, title, abstract, bibliographic or download information, contact: Professor Dr. Bahaudin G. Mujtaba (email available below). General contact details of provider: https://kkgpublications.com/business/ .

    Please note that corrections may take a couple of weeks to filter through the various RePEc services.

    IDEAS is a RePEc service. RePEc uses bibliographic data supplied by the respective publishers.