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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

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The Informativeness of U.S. Banks’ Statements of Cash Flows. / Gao, Zhan; Li, Weijia; O'Hanlon, John Francis.

In: Journal of Accounting Literature, Vol. 43, 01.12.2019, p. 1-18.

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@article{34820d18123342c984758ba6b6b8026d,
title = "The Informativeness of U.S. Banks{\textquoteright} Statements of Cash Flows",
abstract = "Banks, financial statement users, and accounting standard setters have long disagreed on the informativeness of banks{\textquoteright} 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{\textquoteright} SCFs beyond income statements and balance sheets and compares bank{\textquoteright}s SCFs with those of industrial firms. We find that banks{\textquoteright} SCFs have limited incremental value relevance, and are much less value relevant than industrial firms{\textquoteright} SCFs. The second analysis examines and finds no distress-predictive power of banks{\textquoteright} SCFs, especially in the presence of standard distress predictors. Overall, our results are consistent with the view that banks{\textquoteright} SCFs have limited informativeness.",
keywords = "statement of cash flows, banks, value relevance, distress prediction",
author = "Zhan Gao and Weijia Li and O'Hanlon, {John Francis}",
note = "This is the author{\textquoteright}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",
year = "2019",
month = dec,
day = "1",
doi = "10.1016/j.acclit.2019.03.001",
language = "English",
volume = "43",
pages = "1--18",
journal = "Journal of Accounting Literature",
issn = "0737-4607",
publisher = "Elsevier BV",

}

RIS

TY - JOUR

T1 - The Informativeness of U.S. Banks’ Statements of Cash Flows

AU - Gao, Zhan

AU - Li, Weijia

AU - O'Hanlon, John Francis

N1 - 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

PY - 2019/12/1

Y1 - 2019/12/1

N2 - 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.

AB - 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.

KW - statement of cash flows

KW - banks

KW - value relevance

KW - distress prediction

U2 - 10.1016/j.acclit.2019.03.001

DO - 10.1016/j.acclit.2019.03.001

M3 - Journal article

VL - 43

SP - 1

EP - 18

JO - Journal of Accounting Literature

JF - Journal of Accounting Literature

SN - 0737-4607

ER -