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Conference Paper: The Risk Management Role of Accounting Conservatism for Operating Cash Flows
Title | The Risk Management Role of Accounting Conservatism for Operating Cash Flows |
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Authors | |
Keywords | Accounting conservatism Risk management Downside risk Operating cash flows Hedging |
Issue Date | 2012 |
Citation | University of Western Australia
Accounting and Finance Research Forum, Perth, Australia, June 2012 How to Cite? |
Abstract | This study examines whether unconditional and conditional accounting conservatism (UC and CC) serve risk management roles with respect to the downside properties of operating cash flows (OCF), and channels by which they operate. Our results reveal both UC and CC to be negatively associated with OCF downside risk measured by indicators of OCF falling below its expectations, OCF relative lower partial moments and OCF at risk. Tests of operative channels indicate that (1) UC and CC relate positively to cash holdings that reduce OCF downside risk and that (2) UC (CC) substitutes for (complements) corporate hedging in helping mitigate OCF downside risk. Further tests indicate that downside cash flow beta enhances the mitigating effects of UC and CC on OCF downside risk. These findings are robust to alternative measures and controls and lend support to accounting conservatism playing a risk management role with respect to OCF downside risk. |
Persistent Identifier | http://hdl.handle.net/10722/152528 |
DC Field | Value | Language |
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dc.contributor.author | Biddle, GC | - |
dc.contributor.author | Ma, ML | - |
dc.contributor.author | Song, FM | - |
dc.date.accessioned | 2012-07-09T06:44:01Z | - |
dc.date.available | 2012-07-09T06:44:01Z | - |
dc.date.issued | 2012 | - |
dc.identifier.citation | University of Western Australia Accounting and Finance Research Forum, Perth, Australia, June 2012 | - |
dc.identifier.uri | http://hdl.handle.net/10722/152528 | - |
dc.description.abstract | This study examines whether unconditional and conditional accounting conservatism (UC and CC) serve risk management roles with respect to the downside properties of operating cash flows (OCF), and channels by which they operate. Our results reveal both UC and CC to be negatively associated with OCF downside risk measured by indicators of OCF falling below its expectations, OCF relative lower partial moments and OCF at risk. Tests of operative channels indicate that (1) UC and CC relate positively to cash holdings that reduce OCF downside risk and that (2) UC (CC) substitutes for (complements) corporate hedging in helping mitigate OCF downside risk. Further tests indicate that downside cash flow beta enhances the mitigating effects of UC and CC on OCF downside risk. These findings are robust to alternative measures and controls and lend support to accounting conservatism playing a risk management role with respect to OCF downside risk. | - |
dc.language | eng | - |
dc.relation.ispartof | University of Western Australia Accounting and Finance Research Forum | - |
dc.subject | Accounting conservatism | - |
dc.subject | Risk management | - |
dc.subject | Downside risk | - |
dc.subject | Operating cash flows | - |
dc.subject | Hedging | - |
dc.title | The Risk Management Role of Accounting Conservatism for Operating Cash Flows | en_US |
dc.type | Conference_Paper | en_US |
dc.identifier.email | Biddle, GC: biddle@hkucc.hku.hk | - |
dc.identifier.email | Song, FM: fmsong@econ.hku.hk | - |
dc.description.nature | postprint | - |
dc.identifier.spage | 1 | - |
dc.identifier.epage | 50 | - |
dc.publisher.place | Perth, Australia | - |