잉여현금흐름과 이익의 질에 관한 연구

Abstract

The purpose of this study is to investigate the effect of the earnings quality on the stock

prices. While previous studies have used the concept of Cash Flow from operations, this

study is using the free cash flow concept instead. The free cash flow concept used in this

study is derived by deducting additional investment in operations from cash flow from

operations.

The results indicate that when we used the free cash flow concept in determining earnings

quality, there is significant difference in the earnings coefficients of group 1 and 2, where the

group 1 is the group of firms with high earnings quality and the group 2 is the group of firms

with low earnings quality. However, when we used cash flow from operations, we do not

observe any significant difference between the two groups. This finding is quite interesting

because while previous studies indicate that the earnings quality concept is valid with respect

to the cash flow from operations, this study does not, indicating that investors use the concept of free cash flow in evaluating firm value.