Information on Cash Flow Statements and Stock Return
top of page
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute
Asian Institute of Research, Journal Publication, Journal Academics, Education Journal, Asian Institute

Economics and Business

Quarterly Reviews

ISSN 2775-9237 (Online)

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, managemet journal
crossref
doi
open access

Published: 22 February 2023

Information on Cash Flow Statements and Stock Return

Sri Oktavia Br Sitorus, Rosemarie Sutjiati Njotoprajitno, Bram Hadianto

Maranatha Christian University, Indonesia

asian institute research, jeb, journal of economics and business, economics journal, accunting journal, business journal, management journal

Download Full-Text Pdf

doi

10.31014/aior.1992.06.01.492

Pages: 140-147

Keywords: Cash Flow Statement, Financing Activities, Investing Activities, Stock Return

Abstract

This research aims to test and analyze information from the cash flow statement on the share return. The cash flow intended is from operating, financing, and investing activities. Meanwhile, the shares utilized belong to the infrastructure, utility, and telecommunication companies listed on the Indonesian capital market between 2018 and 2021. Because this study uses the change in three cash flows, the secondary data from 2017 to 2021 based on the firm annual reports and the stock price at the end of these years are employed. Additionally, the t-statistics and their probability provided by a multiple regression model to statistically examine the hypotheses proposed are applied. Finally, this study concludes that the higher the cash flow from investing activities, the higher the stock return. However, the positive change in the financing cash flow tends to reduce this return. Meanwhile, this return is not affected by the cash flow from operating activities.

References

  1. Azis, I., Nianty, D. A., & Marlinah, A. (2020). Financial ratios, economic value added and market reaction: A quantitative study on the Indonesian stock exchange. Jurnal Manajemen Bisnis, 7(2), 82–91. https://doi.org/10.33096/jmb.v7i2.573

  2. Bala, S. A. (2017). The relationship between cash flows and stock returns: An empirical study of financial investment banks on the Khartoum stock exchange. Applied Finance and Accounting, 3(2), 14–19. https://doi.org/10.11114/afa.v3i2.2236

  3. Dang, N. H., Tran, M. D., & Nguyen, T. L. A. (2018). Investigation of the impact of financial information on stock prices: The case of Vietnam. Academy of Accounting and Financial Studies Journal, 22(2), 1–12. https://www.abacademies.org/articles/investigation-of-the-impact-of-financial-information-on-stock-prices-the-case-of-vietnam-7223.html

  4. Gitman, L. J., & Zutter, C. J. (2015). Principles of Managerial Finance (14th ed.). Pearson Education, Inc.

  5. Gujarati, D. N., Porter, D. C., & Pal, M. (2019). Basic Econometrics (6th ed.). McGraw-Hill Education.

  6. Hanafi, M. M. (2016). Financial Management (2nd ed.). Badan Penerbit Fakultas Ekonomi Universitas Gadjah Mada.

  7. Hartono, J. (2017). Portfolio Theory and Investment Analysis (11th ed.). Badan Penerbit Fakultas Ekonomi Universitas Gadjah Mada.

  8. Hashmi, S. D., Gulzar, S., Ghafoor, Z., & Naz, I. (2020). Sensitivity of firm size measures to practices of corporate finance: Evidence from BRICS. Future Business Journal, 6, 9. https://doi.org/10.1186/s43093-020-00015-y

  9. Herawati, A., & Putra, A. S. (2018). The influence of fundamental analysis on stock prices: The case of food and beverage industries. European Research Studies Journal, 21(3), 316–326. https://doi.org/10.35808/ersj/1063

  10. Itan, I., & Riana, W. (2021). The impact of cash flow statement on firm value in Indonesia. Forum Ekonomi, 23(3), 442–453. https://doi.org/10.30872/jfor.v23i3.9703

  11. Julyana, J., Njotoprajitno, R. S., & Hadianto, B. (2022). Market responses around the publication dates of the annual financial report. Journal of Economics and Business, 5(1), 46–51. https://doi.org/10.31014/aior.1992.05.01.403

  12. Kasmiati, K., & Santosa, P. W. (2019). The effect of earning information, cash flow components, and financing decision on stock returns: Empirical evidence on Indonesia stock exchange. Journal of Economics, Business, & Accountancy Ventura, 22(2), 157–166. https://doi.org/10.14414/jebav.v22i2.1638

  13. Kenton, W. (2021). Durbin-Watson test: What it is in statistics, with examples. Investopedia. https://www.investopedia.com/terms/d/durbin-watson-statistic.asp

  14. Kipngetich, S. B., Tenai, J., & Kimwolo, A. (2021). The effect of operating cash flow on stock return of firms listed in the Nairobi security exchange. Eastern Journal of Economics and Finance, 6(1), 26–35. https://doi.org/10.20448/809.6.1.26.35

  15. Muniroh, I., & Yuliati, A. (2021). Do cash flow and accounting profit information affect stock price? Journal of Accounting and Strategic Finance, 4(1), 108–121. https://doi.org/10.33005/jasf.v4i1.199

  16. Ni, Y., Huang, P., Chiang, P., & Liao, Y. (2019). Cash flow statements and firm value: Evidence from Taiwan. Quarterly Review of Economics and Finance, 71, 280–290. https://doi.org/10.1016/j.qref.2018.09.004

  17. Njoroge, P., Baumann, M., Baumann, M., & Shevchenko, D. (2021). Stock price reactions to publications of financial statements: Evidence from the Moscow stock exchange. Journal of Corporate Finance Research, 15(1), 19–36. https://doi.org/10.17323/j.jcfr.2073-0438.15.1.2021.19-36

  18. Oroud, Y. S., Islam, M. A., & Ahmad, T. S. T. (2017). The effect of cash flows on the share price on the Amman stock exchange. American Based Research Journal, 6(7), 22–28. https://www.researchgate.net/publication/323285916

  19. Pratama, L. N., & Asyik, N. F. (2017). The impact of financial performance and dividend policy on market reaction. Jurnal Ilmu & Riset Akuntansi, 6(4). http://jurnalmahasiswa.stiesia.ac.id/index.php/jira/article/view/1033

  20. Suliyanto, S. (2009). Research Business Method. Penerbit Andi.

  21. Tunio, F. H., Agha, K., Khan, M. A., Kishore, M., Nabi, A. A., & Zubair, H. U. R. P. (2020). The impact of cash flow on the share price of firms: A case study on gas and oil marketing industry of Pakistan. Palarch’s Journal of Archaeology of Egypt/Egyptology, 17(9), 7290–7300. https://archives.palarch.nl/index.php/jae/article/view/5467

  22. Utomo, S. D., & Pamungkas, I. D. (2018). Cash flow activities and stock returns in manufacturing of Indonesia: A moderating role of earning management. Academy of Accounting and Financial Studies Journal, 22(6), 1–10. https://www.abacademies.org/articles/Cash-Flow-Activities-and-Stock-Returns-in-Manufacturing-of-Indonesia-1528-2635-22-6-307.pdf

bottom of page