The Usefulness of Accounting Estimates for Predicting Cash Flows and Earnings

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The Usefulness of Accounting Estimates for Predicting Cash Flows and Earnings Baruch Lev* New York University Siyi Li University of Illinois Theodore Sougiannis University of Illinois and ALBA January, 2009 * Contact information: Baruch Lev (blev@stern.nyu.edu), Stern School of Business, New York University, New York, NY 10012. The authors are indebted to the editor and reviewers of the Review of Accounting Studies for suggestions and guidance, and to Louis Chan, Ilia Dichev, John Hand, James Ohlson, Shiva Rajgopal, and Stephen Ryan for helpful comments, as well as to participants of seminars at Athens University of Economics and Business, London Business School, Penn State University, Purdue University, University of Illinois…show more content…
IX). On the other hand, the contribution of estimates to the usefulness of financial information is counteracted by two major factors: (i) Objective difficulties. In the current volatile and

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