Review of Accounting Studies

, Volume 14, Issue 2–3, pp 358–391 | Cite as

Are analysts’ earnings forecasts more accurate when accompanied by cash flow forecasts?

  • Andrew C. Call
  • Shuping Chen
  • Yen H. Tong


We examine whether analysts’ earnings forecasts are more accurate when they also issue cash flow forecasts. We find that (i) analysts’ earnings forecasts issued together with cash flow forecasts are more accurate than those not accompanied by cash flow forecasts, and (ii) analysts’ earnings forecasts reflect a better understanding of the implications of current earnings for future earnings when they are accompanied by cash flow forecasts. These results are consistent with analysts adopting a more structured and disciplined approach to forecasting earnings when they also issue cash flow forecasts. Finally, we find that more accurate cash flow forecasts decrease the likelihood of analysts being fired, suggesting that cash flow forecast accuracy is relevant to analysts’ career outcomes.


Analysts Earnings forecasts Cash flow forecasts Forecast accuracy Analyst turnover 

JEL Classification

G24 G29 M41 



We thank Russ Lundholm (Editor) and Phil Shane (Referee) for valuable insights. We have also benefitted from the discussion of Reuven Lehavy at the 2008 RAST Conference. We appreciate the helpful comments of Michael Clement, Pieter Elgers, Max Hewitt, Qianyun Huang, Ping-Sheng Koh, Bernadine Low, Ray Pfeiffer, Dave Piercey, Steve Rock, Richard Sloan, Siew Hong Teoh and workshop participants at the University of Colorado at Boulder, the University of Massachusetts Amherst, and participants at the 2008 AAA Annual meeting and 2008 RAST Conference. We also thank Julia Yu for research assistance.


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Copyright information

© Springer Science+Business Media, LLC 2009

Authors and Affiliations

  1. 1.J.M. Tull School of Accounting, Terry College of BusinessUniversity of GeorgiaAthensUSA
  2. 2.McCombs School of BusinessUniversity of TexasAustinUSA
  3. 3.Nanyang Business SchoolNanyang Technological UniversitySingaporeSingapore

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