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Does Economic Freedom Influence Informativeness of Accruals Regarding Cash Flows?
Journal article   Peer reviewed

Does Economic Freedom Influence Informativeness of Accruals Regarding Cash Flows?

Orakwue B. Arinze, Gordian A. Ndubizu and Menghistu M. Sallehu
Atlantic economic journal, v 50(3-4), pp 189-191
01 Dec 2022
DOI: https://doi.org/10.1007/s11293-022-09753-6

Abstract

Business & Economics Economics Social Sciences
A line of research has examined the relationship between economic freedom (EF) and countries’ outcomes, such as gross domestic product, finding that EF generally advances good outcomes (Hall & Lawson, Contemporary Economic Policy, 2014). Other studies have found that more EF is associated with outcomes, such as lower state-level unemployment rate and higher state bond rating for states in the United States (Belasen et al., Contemporary Economic Policy, 2015; Cebula, Journal of Economics and Finance, 2019). However, research dealing with how state-level EF affects firm-level decisions is sparse. In particular, how EF influences the predictive ability of accruals for forecasting future cash flows remains unexplored. This study fills this gap by examining how EF influences the relationship between components of accruals and future cash flows. In so doing, the study contributes to the literature that examines the effect of EF by highlighting the importance of EF on the information environment of firms. The study also extends research on the relationship between accruals and future cash flows by showing how EF affects the relationship.

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Collaboration types
Domestic collaboration
Web of Science research areas
Economics
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