| dc.description.abstract | I examine the impact of management cash flow forecasts on market participants, including investors and analysts. I posit and find that the news in management cash flow forecasts is priced beyond the news in total earnings. Furthermore, analyst earnings forecast revisions relate positively to the news in management cash flow forecasts. I also find that the impact of management cash flow forecasts varies predictably across firms based on certain characteristics. The market's positive pricing of cash flow forecast news is greater for firms with bad earnings news, for financially distressed firms, for growth firms, and for firms with relatively higher value relevance of reported cash flows than that of reported accruals. The positive relation between analyst earnings forecast revision and the news in management cash flow forecast is also greater for firms with bad earnings news, and for firms with relatively higher value relevance of reported cash flows. Additional tests document that management cash flow forecasts are associated with lower analyst forecast error and lower forecast dispersion in general and especially for firms with relatively more value-relevant reported cash flows. My study provides information to market participants, managers, auditors, and researchers by documenting the consequences of voluntary disclosure in the area of management cash flow forecasts. | |
