Usefulness of the Statement of Cash Flows: Evidence from Indian Mutual Fund Analysts
Document Type
Journal Article
Publisher
MCB UP Ltd
Faculty
Faculty of Business and Public Management
School
School of Accounting, Finance and Business Economics
RAS ID
472
Abstract
This study revisits the issue of the usefulness of the Statement of Cash Flows (SCF) by examining the perceptions of mutual fund investment analysts in India on the relative usefulness of the Income Statement, Balance Sheet, Notes to the financial statements and reports of Chairperson, Directors, and Auditors. Six testable hypotheses were developed and tested. The evidence of this study, drawn from a mail survey that achieved a high response rate, suggests that the SCF is read significantly less thoroughly, poses greater difficulty in understanding, and is perceived to be less useful than any of the other components of annual reports. The results of the study are also compared against those reported in similar studies undertaken in New Zealand and Malaysia, which show significant differences. A possible explanation for the contrasting results of the current survey is that Indian regulation allows only for an indirect format for presenting the statement of cash flows. The results of the survey suggests a pressing need for the Indian regulators to modify the format of reporting the SCF or give an option to companies accorded under IAS ‐7 (revised).
DOI
10.1108/eb060744
Comments
Hassan, S., Narasimhan, M. S., & Christopher, T. (2001). Usefulness of the statement of cash flows: evidence from Indian mutual fund analysts. Asian review of accounting, 9(2), 75-98. Available here