The Relationship between Proprietary Cost Alternatives and Predictive Ability of Future Operating Cash Flows in Capital Market

The quality of corporate’ financial information is one of the most important factors for improving the predictive ability of future operating cash flows to evaluate the internal and external users. On the other hand, the transparency of financial reporting would have some expenses for corporate. The necessary balance between these two realities is considered as a great challenge for entities.The present study examines the relationship between the predictive ability of future operating cash flows and proprietary costs in capital market. Since proprietary costs are not directly measurable, the alternatives indirectly representing proprietary costs have been used. These alternatives include capital intensity, gross margin to sales ratio, sales growth and firm size.The results indicated a significant relationship between the predictive ability of future operating cash flows and proprietary costs. The predictive ability of future operating cash flow decreases with increasing proprietary cost and vice versa.

کلیدواژه ها:

proprietary cost ، capital intensity ، predictive ability of future cash flows