Forecasting Future Cash Flows: The Moderating Role of Accounting Conservatism in Predictive Models

Abstract

This study aims to examine the extent to which operating cash flows,
net income, and sales influence future cash flows, and whether
accounting conservatism moderates these relationships. The research
sample comprises companies listed in the Kompas100 index of the
Indonesia Stock Exchange during the period 2015–2020. Employing a
purposive sampling method, the study collected 320 firm-year
observations from published financial statements. To assess the
predictive ability of operating cash flows, net income, and revenue on
future cash flows, multiple linear regression models were employed
with accounting conservatism included as a moderating variable. The
empirical results indicate that both operating cash flows and net income
have a positive and statistically significant effect on future cash flows.
Conversely, revenue does not exhibit a significant influence on future
cash flows. Moreover, the findings suggest that accounting
conservatism attenuates the relationship between operating cash flows,
net income, and revenue with future cash flows, thereby underscoring
its role in tempering managerial optimism in financial reporting.