Cash flow forecast for South African firms

Li, Y. , Moutinho, L., Opong, K. K. and Pang, Y. (2015) Cash flow forecast for South African firms. Review of Development Finance, 5(1), pp. 24-33. (doi: 10.1016/j.rdf.2014.11.001)

Abstract

This paper applies models in the extant literature that have been used to forecast operating cash flows to predict the cash flows of South African firms listed on the Johannesburg Stock Exchange. Out-of-sample performance is examined for each model and compared between them. The reported results show that some accrual terms, i.e. depreciation and changes in inventory do not enhance cash flow prediction for the average South African firm in contrast to the reported results of studies in USA and Australia. Inclusion of more explanatory variables does not necessarily improve the models, according to the out-of-sample results. The paper proposes the application of moving average model in panel data, and vector regressive model for multi-period-ahead prediction of cash flows for South Africa firms.

• Item Type: Articles
• Status: Published
• Refereed: Yes
• Glasgow Author(s) Enlighten ID: Opong, Professor Kwaku and Moutinho, Professor Luiz and Pang, Mr Yang and Li, Professor Yun
• Authors: Li, Y., Moutinho, L., Opong, K. K., and Pang, Y.
• College/School: College of Science and Engineering > School of Engineering > Systems Power and Energy; College of Social Sciences > Adam Smith Business School > Accounting and Finance; College of Social Sciences > Adam Smith Business School > Management
• Journal Name: Review of Development Finance
• Publisher: Africagrowth Institute
• ISSN: 1879-9337
• Copyright Holders: Copyright © 2014 The Authors
• First Published: First published in Review of Development Finance 5(1):24-33
• Publisher Policy: Reproduced under a Creative Commons License