Analyst's Cash Flow Forecast?Financialization And Cash Flow Manipulation

In recent years,driven by the supply of information and the demand for information,cash flow forecasts have increasingly appeared in China's analyst reports,becoming another important analyst's forecast information following earnings forecasts.In view of the increasing amount of analysts' cash flow forecasting information,and the increasing attention paid by investors,the economic consequences of analysts' cash flow forecasting information based on meeting motives are worth studying.Cash flow information can reflect earnings quality,solvency and liquidity information,and is not easy to manipulate.However,some studies have found that cash flows from operating activities can also be manipulated artificially.Recently,there have been more cash flow manipulations in the Chinese capital market.Therefore,it is necessary to study the cash flow manipulation behavior and its influencing factors of listed companies in China.At the same time,in recent years,China's economy has seen a clear trend of “be distracted from their intended purpose”,and more and more non-financial listed companies have left their main business and got involved in the financial and real estate industries with excessive profits,that is,the financialization of enterprises.The phenomenon of corporate financialization harms the real economy,curbs the corporate innovation,and reduces corporate value.The relationship between the phenomenon of financialization and the manipulation of cash flow has not been studied,so it is of great significance to study the above three.Cash flow information has an important impact on investors' decisions.After the analyst signs the cash flow forecast,the management of a listed company may use cash flow manipulation to increase the cash flow of operating activities disclosed in the financial report,in order to beautify the financial report.In addition,the phenomenon of financialization of listed companies may make it easier to control the cash flow of operating activities.Financialized companies have a high proportion of financial asset,and financial assets have high liquidity.Enterprises with a high degree of financialization may trade and dispose of financial assets by selecting the appropriate timing.Then,they obtain cash flows timely,and classify them into cash flows from operating activities to cater to analysts' cash flow forecasts.Therefore,to meet cash flow forecasts,highly financialized listed companies may carry out strongly cash flow manipulation.In summary,whether the analyst's cash flow forecast has promoted cash flow manipulation of operating activities,and whether a company with a high degree of financialization has stronger cash flow manipulation of operating activities based on meeting motives are the main issues this article intends to explore.This article is based on the data of A-share listed companies from 2007 to 2018.Empirical tests have found that: in order to cater to the cash flow forecast,Listed companies that have been additionally signed more cash flow forecasts by analysts have a stronger degree of cash flow manipulation;Companies with a higher degree of financialization have conducted significantly cash flow manipulation with higher intensity;to meet the cash flow forecast,compared with private enterprises,state-owned enterprises have more significant cash flow manipulation.Further,the manipulation degree of cash flow of listed companies with a higher proportion of non-standardized trading financial assets is significantly higher.Finally,it was found that the degree of cash flow manipulation of highly financialized companies was significantly positively correlated with less accrual manipulation.Based on the above research,this article makes recommendations:(1)Supervisory departments need to strengthen the supervision of the cash flow manipulation of operating activities of listed companies,with particular attention to the cash flow manipulation of financial companies and state-owned companies.(2)Give full play to the role of capital market analysts in identifying and supervising cash flow manipulation.(3)Improve the information disclosure system related to the holding and disposal of financial assets of listed companies.