%0 Journal Article
%T The role of accounting accruals for the prediction of future cash flows: evidence from Spain
%A Laura Arnedo
%A Ferm¨ªn Lizarraga
%A Santiago S¨¢nchez
%J SERIEs
%@ 1869-4195
%D 2012
%I 
%R 10.1007/s13209-011-0070-7
%X The aim of this study is to determine whether accruals have information value beyond that provided by isolated current cash flows for the prediction of future cash flows. Using a sample of 4,397 Spanish companies (mostly privately held), we estimate in-sample regressions of future cash flows on isolated current cash flows and on accrual-based earnings. We then find that the out-of-sample prediction errors provided by the accrual-based earnings model are significantly lower than those obtained with the cash flows model. We also regress the decrease in prediction errors brought about by the addition of accruals on a set of firm-specific circumstances where accounting manipulation is expected. In all cases the decrease in prediction errors is significantly affected in the hypothesized direction.
%K Cash flows
%K Accruals
%K Prediction
%K M41
%U http://link.springer.com/article/10.1007/s13209-011-0070-7