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Please use this identifier to cite or link to this item:
http://hdl.handle.net/2451/27596
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| Title: | The Classification and Market Pricing of the Cash Flows and Accruals on
Trading Positions |
| Authors: | Ryan, Stephen G.
Tucker, X. Jenny
Zarowin, Paul A. |
| Issue Date: | Jun-2005 |
| Series/Report no.: | Paul Zarowin-07 |
| Abstract: | We investigate whether the market prices the change in net trading
assets as an operating or non-operating activity or some mixture of the
two, and whether this market pricing is consistent with the
(fundamental) association of the change in net trading assets with
future cash flows from operations. Our investigation is motivated by the
observation that – despite the classification of the cash flows on
trading positions as operating under FAS 102 – trading is
economically a hybrid operating/non-operating activity. Reflecting this
hybrid nature, we hypothesize and find that the change in net trading
assets has a less positive association with returns and future CFO than
do the pure operating components of cash flows and accruals, and that it
has a more positive association with returns and future CFO than do the
pure non-operating components of cash flows. To the best of our
knowledge, our paper is the first to propose and test hypotheses about
the valuation implications of such hybrid cash flows and accruals. |
| URI: | http://hdl.handle.net/2451/27596 |
| Appears in Collections: | Accounting Working Papers
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