Future cash flow predictability of non-IFRS earnings: Australian evidence
Sinnewe, E, Harrison, JL & Wijeweera, A 2017, 'Future cash flow predictability of non-IFRS earnings: Australian evidence', Australian Accounting Review, vol. 27, no. 2, pp. 118-128.
Published version available from:
The global proliferation of reporting non-International Financial Reporting Standards (IFRS) (pro forma) earnings has been subject to academic debate and regulatory reform. This study examines whether non-IFRS earnings contain statistically significant information on future cash flow predictability that could be useful for investors. The study uses data from large Australian listed companies over a six-year period (2006–11) covering three distinctive periods around the global financial crisis (GFC): pre-GFC, GFC and post-GFC. Results based on fixed effects panel estimation methods suggest non-IFRS earnings do exert a significantly positive impact on future cash flow predictability but only during pre-crisis and crisis periods.