The relationship between Cash flows from operating activities in five-section and return on investment in four-section models of statement of cash flows with the quality of disclosure

ABSTRACT: This research has studied the relationship between Cash flows from operating activities in five-section model and return on investment in four-section model with the quality of disclosure. In this regard the accuracy of predicting future cash flows from operating activities through components of operating earnings has been considered as a criterion of quality of earnings which is the major index of quality of disclosure by its own. For measuring the independent variables of this research we have used Cash flows from operating activities in five-section model and return on investment in four-section model; for evaluating the dependent variables, accuracy of predicting future cash flows from operating activities through components of operating earnings, adjusted Barth model has put in to the practice. The hypotheses of the study were tested through the panel data gathered from 100 listed companies in Tehran Stock Exchange. The result of this study has shown that Cash flows from operating activities in five-section model and return on investment in four-section model cause the increase of the quality of disclosure and in comparative situation return on investment in four-section model is more than Cash flows from operating activities in five-section model increasing the quality of disclosure.