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Are analysts' cash flow forecasts useful?

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  • Sung Hwan Jung
  • Steven Cahan

Abstract

type="main" xml:id="acfi12103-abs-0001"> This study provides evidence that the cost of equity capital decreases with the number of analysts who issue both cash flow and earnings forecasts (cash analysts). The evidence also shows that cash analysts reduce information asymmetry and predict long-term earnings more accurately than analysts who issue only earnings forecasts. Taken together, these findings suggest that cash analysts provide market participants with high-quality information and, as a result, firms benefit from cash analyst coverage in the form of a reduced cost of equity capital.

Suggested Citation

  • Sung Hwan Jung & Steven Cahan, 2015. "Are analysts' cash flow forecasts useful?," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 55(3), pages 825-859, September.
    • Handle: RePEc:bla:acctfi:v:55:y:2015:i:3:p:825-859
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    File URL: http://hdl.handle.net/10.1111/acfi.2015.55.issue-3
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    Cited by:

    1. Hyun Min Oh & Sam Bock Park & Jong Hyun Kim, 2020. "Do Analysts’ Cash Flow Forecasts Improve Firm Value?," IJFS, MDPI, vol. 8(4), pages 1-25, October.
    2. Sandip Dhole & Ferdinand A. Gul & Sagarika Mishra & Ananda M. Pal, 2021. "The joint information role of analysts’ cash flow and earnings forecasts," Accounting and Finance, Accounting and Finance Association of Australia and New Zealand, vol. 61(1), pages 499-541, March.

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