An Empirical Study on the Usefulness of Quarterly Cash Flow Information

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Beginning on April 1, 2011, policies related to quarterly disclosures were simplified. Since that date, disclosures of first- and third-quarter cash flows information have become voluntary. In this study, I compared firms that voluntarily disclosed information related to their first- and third-quarter cash flows in the fiscal year ending in March of 2012 with those that did not. Results show that firms that voluntarily disclose information regarding their first- and third-quarter cash flows have higher returns-on-assets (ROA) and larger investment opportunity sets than firms that choose not to disclose information related to their first- and third-quarter cash flows.