The role of cash flow information in predicting corporate failure: the state of the literature
- 1 April 2001
- journal article
- Published by Emerald in Managerial Finance
- Vol. 27 (4), 3-28
- https://doi.org/10.1108/03074350110767114
Abstract
Provides a comprehensive, critical review of failure prediction with cash flow information since Beaver (1966); and tabulates the methods and cash flow variables used, and the results produced. Describes the literature as “inconsistent and inconclusive” and discusses possible reasons why, e.g. the measurement and diversity of cash flows, lack of model validation, multicollinearity etc. Points out the importance of cash to solvency and dividend payouts; and the limitations it places on creative accounting. Summarizes the reasons for previous inconsistencies and considers possibilities for further research.Keywords
This publication has 30 references indexed in Scilit:
- THE ACCURACY OF CASH FLOW ESTIMATION PROCEDURESAccounting & Finance, 1995
- The need for cash flow reporting: Greek evidenceThe British Accounting Review, 1990
- BANKRUPTCY PREDICTION ‐ AN INVESTIGATION OF CASH FLOW BASED MODELS[1]Journal of Management Studies, 1988
- A Primary Rule for Detecting Bankruptcy: Watch the CashCFA Magazine, 1988
- Using Operating Cash Flow Data to Predict Financial Distress: Some ExtensionsJournal of Accounting Research, 1985
- ZETATM analysis A new model to identify bankruptcy risk of corporationsJournal of Banking & Finance, 1977
- CASH FLOW STATEMENTS FOR INVESTORSJournal of Business Finance & Accounting, 1976
- Failing Company Discriminant AnalysisJournal of Accounting Research, 1974
- FINANCIAL RATIOS, DISCRIMINANT ANALYSIS AND THE PREDICTION OF CORPORATE BANKRUPTCYThe Journal of Finance, 1968
- Financial Ratios As Predictors of FailureJournal of Accounting Research, 1966