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In financial analysis, forecasting often involves regressing one time series variable on another. However, to ensure that the models are correctly specified, one needs to first test for stationarity, co‐integration and causality. In testing for causality, the variables should be stationary. If non‐stationary, one can estimate the model in difference form, unless the variables are co‐integrated. This article determines whether cash flow and earnings variables are stationary, and which variable causes the other, using econometric analysis. In most cases, cash flow variables are found to cause earnings variables. This is so when the models are estimated in levels. However, when estimated in first differences, the causal relationship tends to be reversed such that earnings cause cash flows. Further study is recommended, whereby panel data could be used to improve the power of the tests.

The purpose of this paper is to study the determinants of aggregate fund flows to both equity and hybrid mutual funds. The authors test three hypotheses that help explaining the relationship between mutual fund flows and stock market returns, namely; the feedback-trader hypothesis, the price-pressure hypothesis, and the information-response hypothesis.

The study relies on Swedish quarterly data on mutual fund flows over the period 1998-2013. The methodology is twofold; through the structural models (AR(1)) the authors can say something regarding the relationship between mutual fund flows and financial macro variables. The analysis is further strengthened by utilizing a vector autoregressive model to test for Granger causality in order to determine the order of events.

Similar to both Warther (1995) and Jank (2012), the authors only find support for the information-response hypothesis. Additionally, the authors find new financial variables that have predictive power in determining mutual fund flows, namely; market fear (VIX), exchange rate, households’ expectation regarding inflation as well as outflows from mutual bond funds.

The study contributes to the body of literature in three ways. First, it complements recent findings on determinants of mutual fund flows but the authors also add to the knowledge by included new macro financial variables describing the real economy. Second, the authors include a few additional variables. Third, the vast majority of previous studies have used US data, the authors add to that a deeper understanding of determinants of mutual fund flows in smaller economies by using Swedish data.

The purpose of this paper is to investigate the effect of exponential viscosity-temperature relation, exponential thermal conductivity-temperature relation and the combined effects of variable viscosity and variable thermal conductivity on steady free convection flow of viscous incompressible fluid in a vertical channel.

The governing equations are solved analytically using regular perturbation method. The analytical solutions are valid for small variations of buoyancy parameter and the solutions are found up to first order for variable viscosity. Since the analytical solutions have a restriction on the values of perturbation parameter and also on the higher order solutions, the authors resort to numerical method which is Runge-Kutta fourth order method.

The skin friction coefficient and the Nusselt number at both the plates are derived, discussed and their numerical values for various values of physical parameters are presented in tables. It is found that an increase in the variable viscosity enhances the flow and heat transfer, whereas an increase in the variable thermal conductivity suppresses the flow and heat transfer for variable viscosity, variable thermal conductivity and their combined effect.

This research is relatively original as, to the best of the authors’ knowledge, not much work is done on the considered problem with variable properties.

The purpose of this study is to explore the determinants of investment decisions of Estonian farms after the transition to market economy and accession to the European Union (EU), in the period 2006–2019.

The paper employs Estonian Farm Accountancy Data Network (FADN) individual farm-level data from the period 2006–2019, and standard and augmented accelerator investment models. Generalised methods of moments (GMM) and bias-corrected least-squares dummy variables (LSDVC) regressions were used to estimate parameters of these models.

In the considered period, farm investments were positively affected by sales growth, investment subsidies and the cash flow. Decomposition of cash flow into volatile, market income related part, and more stable, farm subsidies related part indicated that investments do not depend on market income part of cash flow. Instead, the stable part of the cash flow (farm subsidies) had a significant and positive effect on investments. This suggests that credit rationing could be present in the EU agriculture, and it depends on the farm subsidies not market income of farms.

Despite the wealth of literature on the investment behaviour of farmers, this article is the first attempt to decompose farm cash flow into stable (farm subsidies) and volatile (market income) parts to explain the role of subsidies as a part of cash flow in credit rationing.

The purpose of this paper is to test the effects of antitakeover protection on investment-cash flow sensitivity and whether these effects are moderated by firms’ accounting information environment and agency problems.

To test the effects of agency problems, the authors use the passage of second-generation antitakeover laws as the testing ground, which is a pseudo-natural experiment that is widely used in the accounting, finance and economics literature (e.g. Armstrong et al., 2012; Bertrand and Mullainathan, 2003).

The authors’ analysis shows that investment-cash flow sensitivity is greater when managers are insulated from takeovers. The authors’ results also demonstrate that the effects of the passage of antitakeover laws on investment-cash flow sensitivity are greater when firms’ accounting information environment is poor, which is measured by fewer analysts following and higher analyst forecast dispersion. The authors also show that the effects of the passage of antitakeover laws on investment-cash flow sensitivity are greater when firms have severe agency problems, which are measured by more free cash flow.

The authors’ research extends the empirical accounting literature about the effects of corporate governance and accounting information environment on firms’ operating and financial decisions.

The role of accounting information in setting security prices is one of the most fundamental issues in accounting and finance. The purpose of this study is to extend the research on the value relevance of accounting numbers in three important directions. Firstly, we consider the French context and analyze if earnings and/or cash flows are relevant to explain stock returns. Secondly, we test whether the explanatory power of accounting variables can be improved by using a nonlinear specification. Thirdly, we investigate how firm‐specific attributes such as size, debt level and firm life‐cycle influence the relative relevance of accounting measures (earnings and cash flows). Our results support a nonlinear relationship between stock returns and accounting variables. They indicate also that the relevance of earnings is conditional on size, debt level and life cycle of the firm. In contrast, the earnings change reveals more information when the firms are large, mature or characterized by a low degree of debt. These results are consistent with difference in earnings persistence between firms. With regards to cash flows, we find that they do not reveal additional information beyond that contained in earnings.

Previous research demonstrates that non-public policy variables (wage rate, raw material, GDP, GDP/capita, inverse of tax rate, and population) have significant influence in determining the flow of U.S. investment. Research has not, however, demonstrated that government accounting variables significantly affect Foreign Direct Investments (FDI) flow into either Organization of Petroleum Exporting Countries (OPEC) or non-OPEC countries. In light of this omission, the focus of this inquiry is on the examination of the potential influence of both government accounting and non-public variables in influencing the flow of the stock of U.S. foreign direct investment in the OPEC nations. To accomplish the objective, government accounting and non-public policy variables are employed to investigate whether they matter in determining investment flows into these countries. The results of the study suggest a direct linkage between the flow of FDI and accounting variables.

Two important methodologies having some common grounds, but based on differing contexts and paradigms are Physical System Theory (PST) and System Dynamics (SD). The developments in both the fields have taken place almost independently, and attempts have been made to integrate the two to complement their strengths and limitations. This paper provides an overview of PST in terms of its foundations, philosophy, fundamental postulates, recent developments on its simplification and enlargement, and applications to socio‐economic and managerial systems. A comparison of PST is made with SD on different fronts so as to understand their similarities and differences for carving out their place in modelling of managerial and socio‐economic systems and integrating the two more meaningfully and flexibly. The paper is concluded emphasizing the need for a ‘Flexible System Theory’ which can relate many such systems based approaches and techniques on the whole continuum from hard to soft systems thinking to cater the whole spectrum of problem situations effectively.

This study empirically examines the effect of capital controls on the volume and composition of capital flows at aggregated as well as at disaggregated level by different asset classes such as debt, FDI, equity, and derivatives.

Several dynamic panel SYS-GMM models are employed on two sets of unique data on cross-border capital flows and capital control index along with control variables at aggregated and disaggregated level by different asset classes during 1995–2015 for a sample of 31 Asian economies.

Econometric findings suggest that higher capital controls effectively reduce gross capital flows. The reduction in gross capital flows is largely found to be on account of effectiveness of controls on equity flows. However, the impact of controls on overall debt and derivative flows is found to be insignificant. Further, it was found that an increase in direct capital controls disaggregated by inflow and outflow categories significantly reduced the inflow of debt and equity + FDI flows and outflow of equity + FDI and derivative flows. Finally, the study did not find any substitution effect (due to indirect controls) and net effect on capital flows.

Results of such empirical examination may enable governments in respective countries to pursue prudent and rational capital controls as a shield against capital flight and shock transmission.

Preventing capital flight through effective controls has macroeconomic benefits such as maintaining stability in income, growth, interest rate, exchange rate, and employment levels for the society.

The primary contribution of the study is the analysis of effectiveness of capital controls disaggregated by different asset categories such as debt, equity, FDI, and derivatives using two unique recent data sets for a large sample of Asian economies.

Provides a comprehensive, critical review of failure prediction with cash flow information since Beaver (1966); and tabulates the methods and cash flow variables used, and the results produced. Describes the literature as “inconsistent and inconclusive” and discusses possible reasons why, e.g. the measurement and diversity of cash flows, lack of model validation, multicollinearity etc. Points out the importance of cash to solvency and dividend payouts; and the limitations it places on creative accounting. Summarizes the reasons for previous inconsistencies and considers possibilities for further research.