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Key research themes
1. What are the practical incentives and choices influencing cash flow statement classifications and their impact on financial reporting?
This research theme investigates the accounting choices companies make in classifying cash flows, particularly regarding interest and dividends received or paid, in cash flow statements (CFSs). It explores the incentives behind these choices, such as indebtedness, profitability, size, and auditor influence, and assesses how these affect the presentation and interpretation of cash flows from operations, investing, and financing activities. Understanding these choices is crucial for stakeholders reliant on transparent and comparable financial information, as classification options can alter the perceived liquidity and financial performance.
Key finding: The study finds that Brazilian non-financial companies exercise classified flexibility in presenting interest and dividends within cash flow statements, driven mainly by factors such as the company's indebtedness and... Read more
Key finding: This paper highlights the critical role of the cash flow statement in reflecting cash receipts and payments, including both current and non-current transactions. It underscores how the depiction of cash flows assists... Read more
Key finding: The research demonstrates that within accrual accounting systems, the cash flow statement plays a pivotal role in revealing the timing discrepancies between income recognition and actual cash transactions. It elaborates on... Read more
2. How does the transition from cash-based to accrual-based accounting affect public sector financial reporting and accountability?
This theme focuses on the challenges, benefits, and contextual applications of adopting accrual accounting in public sector entities traditionally using cash-based systems. It encompasses studies on public sector accounting reforms, particularly the implementation of International Public Sector Accounting Standards (IPSAS), and investigates how accrual accounting can improve transparency, accountability, and decision-making amid varying institutional readiness. The transition often involves addressing human resource competencies and system limitations, especially in developing countries, highlighting the social and organizational dimensions of accounting reform.
Key finding: This analysis reveals that while IPSAS advocates for a shift to accrual accounting to enhance public sector financial reporting, practical challenges—such as institutional capacity, political culture, and local economic... Read more
Key finding: The study concludes that the Jordanian public sector’s gradual shift from cash accounting to accrual accounting via IPSAS implementation significantly improves transparency, accountability, and quality of financial reports.... Read more
Key finding: This study identifies that positive accountant attitudes and targeted training positively influence readiness to implement accrual accounting in Malaysia’s public sector. However, substantial concerns exist around employee... Read more
3. What is the comparative effectiveness of cash-based versus accrual-based accounting information in predicting future cash flows and reflecting true financial performance?
This theme examines empirical evidence on the relative predictive capabilities and informational content of cash-based and accrual-based accounting information, especially in corporate contexts subject to inflationary and economic volatility. It evaluates how each basis influences the measurement of profitability, asset valuation, and decision usefulness for stakeholders. These analyses shed light on the methodological debates regarding earnings quality, timing of revenue and expense recognition, and the utility of cash flows statements versus earnings reports.
Key finding: Using data from 80 Nigerian non-financial firms, the study finds that accrual-based earnings exhibit superior predictive ability for forecasting future operating cash flows compared to cash-based accounting. The research... Read more
Key finding: The paper demonstrates that both historical cost accounting and current cost (inflation-adjusted) accounting significantly impact reported profits in Nigerian manufacturing firms. However, inflation-adjusted financials... Read more
Key finding: The paper discusses that while accrual accounting provides a more accurate and realistic measure of net income by matching income and expenses in appropriate periods, many small and medium enterprises prefer cash basis... Read more