Cross-Sectional Determinants of the Impact of

I examine the impact of management cash flow forecasts on investors and analysts. The news in management cash flow forecasts is priced beyond total earnings news. Analysts revise earnings forecasts more for the news in these forecasts than for the news in accruals. I further find that the market’s higher pricing of cash flow forecast news is greater for firms 1) with bad earnings news, 2) in financial distress, 3) experiencing higher growth, and 4) with relatively higher value relevance of reported cash flows. The positive relation between analyst earnings forecast revision and management cash flow forecast news is also greater for firms with bad earnings news and as the value relevance of reported cash flows increases. Additional tests document that analysts forecast earnings more accurately with lower dispersion for firms that provide such forecasts. The negative relation is greater as the value relevance of reported cash flows increases. My study provides information to market participants, managers, auditors, and researchers by documenting the consequences of voluntary disclosure in the area of management cash flow forecasts.