In addition to the price to earnings ratios dominant effect on a stock’s price, does a company’s balance sheet information, namely, cash flow, have a further effect?


by : 
Daniel Z.


This research project will be investigating the relationship between a company's cash flow from operations and its future earnings in order to determine whether the market under appreciates the CFO variable. There will be two parts to this investigation.

1. In setting the stock price of a company, does the market consider CFO an incrementally "value-relevant" piece of information, after it already has a company's reported earnings?