Analysts’ cash flow forecasts and firms’ information environment: evidence from bid-ask spread
International Journal of Accounting & Information Management
ISSN: 1834-7649
Article publication date: 2 January 2024
Issue publication date: 13 June 2024
Abstract
Purpose
This study aims to investigate whether the cash flow forecasts (CFF) of analysts can disseminate valuable information to the information environments of companies.
Design/methodology/approach
The author uses empirical archival methodology to conduct differences-in-difference analyses.
Findings
It is found that information asymmetry decreases in the treatment group following the initiation of CFF during the postperiod, which is consistent with the hypothesis of this paper.
Originality/value
To the best of the author’s knowledge, this study is the first among the cash flow forecast studies to demonstrate the usefulness of CFF in the mitigation of information asymmetry, a friction that is widespread in capital markets.
Keywords
Acknowledgements
This research is based on Mengyu Ma’s dissertation. The author thanks Abhijit Barua for guidance. The author thanks Clark Wheatley, Johnathan Milian and Qiang Kang for help. The author also thanks conference participants of AAA Annual Meeting, AAA Southeast Region Meeting and AAA Ohio Region Meeting for valuable comments.
Citation
Ma, M. (2024), "Analysts’ cash flow forecasts and firms’ information environment: evidence from bid-ask spread", International Journal of Accounting & Information Management, Vol. 32 No. 3, pp. 430-446. https://doi.org/10.1108/IJAIM-10-2023-0265
Publisher
:Emerald Publishing Limited
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