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Please use this identifier to cite or link to this item: http://hdl.handle.net/123456789/10607

Title: Comparative Predictive Abilities of Earnings and Operating Cash Flows on Future Cash Flows: Empirical Evidence from Ghana
Authors: Agana, Joseph Akadeagre
Mireku, Kwame
Appiah, Kingsley Opoku
Keywords: Comparative predictive ability
Earnings
Operating cash flows
Future cash flows
Issue Date: 2015
Publisher: Accounting and Finance Research
Citation: Accounting and Finance Research; Vol. 4, No. 3; 2015
Abstract: Cash flow prediction is an essential component of economic decision making, particularly in investment and credit evaluation. This paper examines the comparative predictive ability of earnings and operating cash flows variables on future operating cash flows within a developing economy’s setting. Ordinary Least Squares (OLS) method is used to develop regression models over the period of 2002 to 2012. Current operating cash flows, as proxy for future operating cash flows, are regressed on past one, two and three years of earnings and operating cash flows as predictors. Results from the regression analysis reveals earnings and operating cash flows are significant in predicting future operating cash flows but have different predictive powers with earnings providing a superior comparative predictive ability on future cash flows. The paper therefore concludes that earnings are a better predictor of future operating cash flows than historical operating cash flows itself.
Description: An article published Accounting and Finance Research; Vol. 4, No. 3; 2015
URI: http://hdl.handle.net/123456789/10607
Appears in Collections:College of Arts and Social Sciences

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