Information Content and Prediction Power of Allocated or Accumulated Classifications of Tax Paid in Cash Flow Statement

Abstract

This paper examines the information content and prediction power of three proposed patterns of tax paid classification in cash flows statements. The findings show that in all industries, and also, in each industry the allocated pattern has the most information content, and accumulated and separated patterns place in the following ranks, respectively. Allocated and accumulated patterns compared with separated pattern have more prediction power; but the difference is not significant. However, in the car and food industries a significant difference has been observed. In the car industry, separated pattern and in the food industry, allocated and accumulated patterns have more prediction power.

Keywords

• : cash flow statements
• tax paid
• separated classifica-tion
• allocated classification
• accumulated classification