Trends in statistically based quarterly cash-flow prediction models

This paper provides a succinct review and synthesis of the literature on statistically based quarterly cash-flow prediction models. It reviews extant work on quarterly cash-flow prediction models including: (1) complex, cross-sectionally estimated disaggregated-accrual models attributed to Wilson (1986 G.P.WilsonThe relative information content of accruals and cash flows: Combined evidence at the earnings announcement and annual report release dateJournal of Accounting Research24Suppl.1986163200 [Google Scholar], 1987 G.P.WilsonThe incremental information content of the accrual and funds components of earnings after controlling for earningsAccounting Review621987293322[Web of Science ®] , [Google Scholar]) and Bernard and Stober (1989) V.L.BernardT.L.StoberThe nature and amount of information in cash flows and accrualsAccounting Review6441989624652[Web of Science ®] , [Google Scholar], (2) parsimonious ARIMA models attributed to Hopwood and McKeown (1992) W.S.HopwoodJ.C.McKeownEmpirical evidence on the time-series properties of operating cash flowsManagerial Finance1819926278[Crossref] , [Google Scholar], (3) disaggregated-accrual, time-series regression models attributed to Lorek and Willinger (1996) K.S.LorekG.L.WillingerA multivariate time-series prediction model for cash-flow dataAccounting Review71199681101[Web of Science ®] , [Google Scholar], and (4) parsimonious ARIMA models with both adjacent and seasonal characteristics attributed to Lorek and Willinger (2008 K.S.LorekG.L.WillingerTime-series properties and predictive ability of quarterly cash flowsAdvances in Accounting2420086570[Crossref] , [Google Scholar], 2011 K.S.LorekG.L.WillingerMulti-Step-ahead quarterly cash-flow prediction modelsAccounting Horizons2520117186[Crossref], [Web of Science ®] , [Google Scholar]). Due to the unavailability of long-term cash-flow forecasts attributed to analysts, increased importance has been placed upon the development of statistically based cash-flow prediction models given their use in firm valuation. Specific recommendations are also provided to enhance future research efforts in refining extant statistically based quarterly cash-flow prediction models.