信息披露质量和现金流外文翻译

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外文翻译

原文：

Disclosure Quality and Cash Flow

We study a relatively recent change in voluntary disclosure practices by management, namely the issuance of management cash flow forecasts. While we find some management cash flow forecasts in the early 1980s, the incidence of such disclosures is low until recent years. However, since 2000, there has been a dramatic increase in the issuance of management cash flow forecasts and the number of such forecasts has more than tripled from pre-2000 levels.

One potential explanation for this trend is Regulation FD, which went into effect in 2000. For example, if managers were disclosing cash flow forecasts privately to analysts prior to Regulation FD, they would have to publicly disclose such forecasts to all parties after Regulation FD or curtail their management cash flow forecasts completely. Regulation FD potentially increases company disclosure of a wide array of financial information, including cash flow information. Consistent with this, we also document an increasing frequency of management earnings forecasts in recent years.

Another potential explanation for the recent trend of more management cash flow forecasts is investors and analysts paying more attention to cash flow information than before. Recent corporate scandals involving Enron, WorldCom and others, have heightened investor concern over potential accounting earnings manipulations. Such concerns were recently noted in a Business Week article entitled “Fuzzy Numbers”.Consistent with an increase in the demand for cash flow information by investors, we also find analyst forecasts of cash flow during the 2000-2003 period more than doubled from pre-2000 levels.

We study voluntary management cash flow forecasts and test hypotheses on managers’incentives to issue these forecasts. Prior voluntary disclosure literature

offers varying predictions for management’s incentives to provide disclosure as well as the nature of information conveyed in management disclosures. For example, theoretical models demonstrate that when there are proprietary costs of disclosure or when investors are uncertain about the information management has, firms will voluntarily disclose good news and withhold less favorable news. Early empirical studies on management earnings forecasts provide evidence consistent with this prediction. More recent empirical work, however, suggests the importance of litigation risk in affecting management earnings forecasts. Skinner[1994] and Kasznik and Lev[1995] document that management earnings forecasts are more likely to convey bad news, consistent with managers are concerned with the risk of litigation and issue preemptive earnings forecasts to adjust downward investor expectations.

Earnings forecasts likely play a special role in reducing the risk of litigation, and a more important role than management cash flow forecasts. For firms with bad news and thus concerned about potential litigation, earnings-related disclosures are likely to be more effective in conveying that bad news to investors than disclosures of other financial information such as cash flows because, in general, earnings is the most informative summary performance measure. Thus, earnings disclosure is more likely to bring about the needed adjustment to investor expectations. As a result, the propensity for earnings forecasts to reflect bad news as documented in some of the prior studies may not apply to other types of management forecasts such as cash flow forecasts. Consistent with this, using data since the 1980’s, researchers find that better performance is associated with higher overall disclosure levels.

We predict that management issues cash flow forecasts to signal good news in cash flow, to meet investor demand for cash flow information, and to pre-commit to a certain composition of earnings in terms of cash flow versus accruals, thus reducing the degree of freedom in earnings management. Our findings are consistent with these predictions. We find that the likelihood of management cash flow forecasts increases in periods when there is a large increase in operating cash flow, when analysts are forecasting an earnings loss, when management specifically reveals in their press releases that earnings will be either below or above expectations and when firm is