Showing papers on "Cash flow forecasting published in 1988"
TL;DR: In this paper, the authors argue that there are costs associated with open-market repurchase programs, since they provide managers with opportunities to use inside information to benefit themselves at stockholders' expense.
466 citations
TL;DR: In this article, a panel data set for twenty-five firms indicates con siderable support for a hybrid free cash flow model in which explorat ion expenditures appear guided by neoclassical profitability measures, but at the margin, cash flow also exerts an independent influence.
Abstract: Over the period 1979-85, the petroleum industry offers a unique test of the agency theory of corporat e restructuring. A panel data set for twenty-five firms indicates con siderable support for a hybrid free cash flow model in which explorat ion expenditures appear guided by neoclassical profitability measures , but at the margin, cash flow also exerts an independent influence. The magnitude of the parameter estimates suggests that the free cash flow hypothesis does not fully explain the gains from restructuring. Copyright 1988 by MIT Press.
84 citations
TL;DR: In this paper, the authors present a synthesis of past capital budgeting studes, which they use to evaluate the appropriate discount rate, incorporating risk in the decision process, and employing logical procedures in the capital expenditure decision-making process.
Abstract: SEvaluating capital investment decisions generally requires two types of information-estimates of relevant cash flows and the appropriate discount rate(s). There is evidence in the academic literature that previous works have heavily concentrated on developing and refining quantitative techniques for measuring the appropriate discount rate, incorporating risk in the decision process, and employing logical procedures in the capital expenditure decision-making process. In their synthesis of past capital budgeting studes, Scott and
57 citations
TL;DR: In this article, the authors adopt a rational market structure to examine the link between the cash flow effects of management policy decisions and the resulting stock price reactions, and find that it is not possible to infer the sign of association between the stock price reaction and any characteristics of the firm that are observable before management announces its decision.
53 citations
01 Mar 1988
TL;DR: In this article, the authors review the traditional methods of evaluating development projects in this context and suggest that more detailed cash flow techniques should be adopted to allow greater flexibility in appraisals, thus accounting for changes in circumstances through sensitivity and scenario analysis.
Abstract: A development project is characterised by many periods of negative cash flows followed by a relatively smaller number of cash surplus periods. Thus, because of the time value of money, a major risk in real estate development arises from events which extend the periods between the negative and positive cash flows. This paper reviews the traditional methods of evaluating development projects in this context and suggests that more detailed cash flow techniques should be adopted to allow greater flexibility in appraisals, thus accounting for changes in circumstances through sensitivity and scenario analysis. However, even where such techniques are used, developments should not be viewed in isolation and consideration must also be given to the feasibility of a scheme in a corporate framework.
21 citations
01 Jan 1988
TL;DR: Kim et al. as mentioned in this paper proposed a valuation framework for short-term cash flow forecasting systems and presented an international accounts receivable management model with behavioral and international perspectives, including trade credit decisions under imperfect information.
Abstract: Preface (Yong H. Kim). Part I: Valuation Framework and Liquidity. The value of short-term cash flow forecasting systems (T.W. Miller, B.K. Stone). Liquidity and the financing policy of the firm: an empirical test (E.O. Lyn, G.J. Papaioannou). Part II: Trade Credit: Efficient Market, Imperfect Information, and an International Perspective. A role for trade credit in an efficient market (R.E. Rouault, Jr., D.J. Kaufman, Jr.). Unbiased trade credit decisions under imperfect information (D.R. Fewings). An international accounts receivable management model (P. Ahtiala, Y.E. Orgler). Part III: Managing Cash: Behavioral and International Perspectives. Behavioral relations and the optimal cash discount (W. Beranek). Optimum cash balances for international firms (Jongmoo Jay Choi, D.K. Ghosh and Yong H. Kim). Determination of multicurrency cash balances: strong versus weak dollar cycles (L.A. Soenen, J. Madura). Swaps as a cash management tool (J.F. Marshall, V.K. Bansal and A.L. Tucker). A test of one-way arbitarge in the Canadian/U.S. dollar commercial paper markets (M. Anvari, A.H.R. Davis).
10 citations
4 citations
3 citations
01 Jan 1988
2 citations
Book•
01 Jan 1988
TL;DR: In this paper, a three-part study empirically tested the ability of three operating funds flow measures (working capital, net quick assets, and cash) to predict future cash flow.
Abstract: In Statement ot Financial Accounting Standards N o 55, "Statement of Cash Flows," the Financial Accounting Standards Board requires a statement of cash flows in place of a statement of changes in financial position. This information is assumed to be useful in predicting future cash flow. The first part of this three-part study empirically tests this assumption by comparing the abilities of three operating funds flow measures (working capital, net quick assets, and cash) to predict future cash flows. The second part of this study determines whether the reporting concept best for predicting future cash flow is dependent upon industry classification. The third part examines whether differences in the abilities of the three operating funds flow measures to predict future cash flow are affected by differences in the components of the current assets and current liabilities of a firm. Data for 454 firms were obtained from Compustat for the ten-year period from 1976-1985. Variables examined in the study included the three operating funds flow measures as
Journal Article•
01 Jan 1988
TL;DR: In this article, the authors describe the management of cash and marketable securities, and the transactions motive looks at the holding of cash to meet current transactions, where reasonable cash balances are maintained, therefore, to meet daily transactions and to minimize the nuisance and costs of having to replenish holdings too frequently.
Abstract: This chapter describes the management of cash and marketable securities. The transactions motive looks at the holding of cash to meet current transactions. The need for spare cash to transact business arises because cash inflows do not always equal outflows, and there are definite, and often fixed costs involved in converting even highly liquid assets such as marketable securities into cash. Consequently, it is both impractical and expensive to make such conversions too frequently, and for small amounts each time. Even as individuals, one does not withdraw cash from savings accounts several times a week in $10 amounts, simply because to do so would prove inconvenient and time-consuming. Reasonable cash balances are maintained, therefore, to meet daily transactions and to minimize the nuisance and costs of having to replenish holdings too frequently. The amount of cash held depends on the typical volume of business, and possibly on the interest that can be earned if excess cash is invested.