Accruals, cash flows and earnings in european privately held firms

  1. Amor Tapia, Borja
  2. Tascón Fernández, María Teresa
Journal:
Pecunia: revista de la Facultad de Ciencias Económicas y Empresariales
  1. Fanjul Suárez, José Luis (coord.)

ISSN: 1699-9495

Year of publication: 2011

Issue Title: Special Issue on Financial Markets and Corporate Finance

Issue: 1

Pages: 133-156

Type: Article

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More publications in: Pecunia: revista de la Facultad de Ciencias Económicas y Empresariales

Abstract

This paper examines the properties of accruals, cash flows and earnings in European privately held firms. We start from several hypotheses about the persistence of earnings and its components, finding that private companies seem to behave in a different manner than the publicly traded firms tested in previous literature. As hypothesized, differences are significant when accruals are extreme, though in European private firms, persistence of ROA relative to cash flow follows a different pattern than in US public firms. But contrary to our expectations, differences in persistence are not significant when companies report positive versus negative earnings.

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