Paper Title
Accounting Profits, Cash Flows and Stock Returns
Abstract
Literatures on traditional accounting concept believe that accounting profit, not cash flows, superior determines return of a business. Theories related to cash flow management and stock returns that are commonly used through the literature include conventional income concept and cash flows management model. Prior researchers found that accounting earnings dominate cash flows from operating for providing a measure of stock returns. The main purpose of this study is to explore two performance measurements which are accounting profit and cash flows that affect stock returns in Thailand’s capital market. Completed financial data of 830 samples from companies listed in Thailand Stock Exchange (TSE) SET 100 Index, excluding financing and banking sector, during the period of 2009-2018 are analyzed. Multiple regression model with statistic testing at the significant level 0.05 has been implemented. Linear and multiple regression models are applied to investigate the degree of the effect of independent variables on the stock returns. The hypothesis testing results show that there is a positive association between stock returns and cash flows from operating. This paper also displays that growth positively affects stock returns while firm size plays an opposite direction.
Keywords - Net Income, Cash Flows from Operating, Cash Flows from Investing, Cash Flow from Financing, Stock Returns, Thailand Stock Exchange