Accounting reporting standards: attitudes toward cash flow reporting and the impact on share price. (27th November 2019)

• Record Type: Journal Article
• Authors: Whitten, Donna; Brahmasrene, Tantatape
• Is Part Of: International journal of critical accounting. Volume 11:Number 1(2019)
• Page Start: 26
• Page End: 39
• Publication Date: 2019-11-27
• Subjects: US GAAP -- international financial reporting standards -- IFRS -- share price -- diluted earnings -- EPS -- book value -- dividends -- cash flow per share -- CFPS; Accounting -- Periodicals; 657.05
• Languages: English
• ISSNs: 1757-9848

Abstract

This study explores the attitudes of accounting reporting standard-setters towards cash flows and the impact on cash flow per share (CFPS) on share price. Included are companies headquartered in the USA, where generally accepted accounting principles (US GAAP) is adhered to and reporting CFPS is prohibited, and Canada, where international financial reporting standards (IFRS) has been adopted and companies are free to report CFPS. The results indicate differences exist. First, the firm's country where headquartered is highly significant in determining share price. Next, whether earnings per share (EPS) was positive or negative is significant. Finally, for US based companies, CFPS was significant when EPS was positive, but insignificant when EPS was negative. Conversely, for those firms that are headquartered in Canada, CFPS is highly significant whether EPS is positive or negative.