Santa Clara University

Back to Business Calendar


Departmental Research : Accounting: Mike Calegari : Accounting : April 5, 2013

1:30 PM to 3:00 PM

Title: The role of current accruals in predicting future tax payments and operating cash flows

Abstract: This study examines the ability of aggregate accrual-based measures to predict next year?s tax cash flows and operating cash flows. Net income is decomposed into three components: current net income, deferred net income, and nonreversing accruals. The results show that the current tax provision is a better predictor of future tax cash flows than either the current year?s tax cash flows or the total tax provision; and that current net income is a better predictor of future operating cash flows than either the current year?s operating cash flows or total net income. The results imply that aggregate accrual-based measures that only include current operating accruals are better at predicting future cash flows than either current year cash flows or aggregate measures that include all operating accruals. The findings hold across different years and are robust among several different samples that include firms with characteristics that may affect the accruals-cash flow relation.


Lucas Hall

Accounting (Academic Dept)
Melissa Sims
Tel 408-554-4578
Special Calendars
Printer-friendly format