In this study, we investigate why earnings underperform relative to cash flows in explaining future cash flows. Using analytical and empirical analyses of the components of R2 values, we demonstrate an ‘opposing covariances effect’ in which covariances of opposite sign are summed and thus...

The purpose of this paper is to systematically review and synthesise top-level accounting literature on presentation format of accounting information to reveal patterns and causal relationships, which support the understanding of the role of presentation format within accounting information...