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    Rights statement: This is the author’s version of a work that was accepted for publication in Journal of Accounting Literature. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Accounting Literature, 43, 2019 DOI: 10.1016/j.acclit.2019.03.001

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The Informativeness of U.S. Banks’ Statements of Cash Flows

Research output: Contribution to journalJournal article

E-pub ahead of print
<mark>Journal publication date</mark>1/12/2019
<mark>Journal</mark>Journal of Accounting Literature
Volume43
Number of pages18
Pages (from-to)1-18
Publication statusE-pub ahead of print
Early online date10/04/19
Original languageEnglish

Abstract

Banks, financial statement users, and accounting standard setters have long disagreed on the informativeness of banks’ statements of cash flows (SCFs) and there is a lack of relevant evidence in the literature. This paper examines the informativeness of the SCFs of U.S. commercial banks in two settings where SCFs are purported to be useful. The first analysis tests the incremental value relevance of banks’ SCFs beyond income statements and balance sheets and compares bank’s SCFs with those of industrial firms. We find that banks’ SCFs have limited incremental value relevance, and are much less value relevant than industrial firms’ SCFs. The second analysis examines and finds no distress-predictive power of banks’ SCFs, especially in the presence of standard distress predictors. Overall, our results are consistent with the view that banks’ SCFs have limited informativeness.

Bibliographic note

This is the author’s version of a work that was accepted for publication in Journal of Accounting Literature. Changes resulting from the publishing process, such as peer review, editing, corrections, structural formatting, and other quality control mechanisms may not be reflected in this document. Changes may have been made to this work since it was submitted for publication. A definitive version was subsequently published in Journal of Accounting Literature, 43, 2019 DOI: 10.1016/j.acclit.2019.03.001