Skip to main content
  • Research Article
  • Published:

Cash flow management in the Chinese stock market: An empirical assessment with comparison to the U.S. Market


This paper examines cash flow management in the Chinese market and compares it to that in the U.S. market. It adopts Burgstahler and Dichev (1997) and Degeorge et al.’s (1999) method and the best-fitted distribution model to analyze the financial data of Chinese listed firms during 1998–2005 and the forecasted cash flow per share (CPS) data for Chinese firms in the I/B/E/S database during 1993–2005. Results reveal that cash flows reports are not as reliable as people think, and managers manipulate cash flows just as they manipulate earnings.

Further analyses show that zero point, last year’s cash flow and analyst cash flow forecast are the three thresholds that influence managers’ decision when they report cash flow performance. Over 16% of the firms with small positive cash flows manipulate their cash flow. Moreover, 16.64% of the firms with small changes in cash flow and 9.81% of the firms with small surprises manipulate cash flows to reach the targets. A comparative analysis shows that cash flow management behaviors around zero and zero changes are more prevalent in the Chinese market than in the U.S. market. Cash flow management around analyst cash flow forecasts, however, is no more prevalent than that in the U.S. market.


为了研究中国股市经营现金流量管理行为, 运用Burgstahler and Dichev (1997) 、 Degeorge et al. (1999) 的方法和最佳拟合曲线模型, 通过考察 1998–2005 年间中国上市公司财务数据及 1993–2005 年间 I/B/E/S 数据库中中国上市公司的每股现金流量预测数据, 发现企业报告的经营现金流量, 像盈余一样, 受到了公司管理层的控制和操纵。 这不同于与以往“现金为王”、 “现金流量不可操纵”的观点。 由此, 提出了与“盈余管理”相对应的概念: “现金流管理”。

进一步的研究显示: 0 点, 往年的经营现金流量和分析师对现金流量的预测是中国上市公司现金流分布的三个显著的阈值点。 16.41% 的报告微正现金流量的公司是通过操纵行为来达到报告正现金流量的目的, 此外, 分别有 16.64% 和 9.81% 的报告微正变化和微正预测差异的公司同样是通过操纵行为来达到往年现金流量和分析师预测现金流量的目的。 对比分析显示, 中国A股上市公司前两个阈值点的现金流管理比美国上市公司更普遍。


  • Basu S (1997). The conservatism principle and the asymmetric timeliness of earnings. Journal of Accounting and Economics, 24(1): 3–37

    Article  Google Scholar 

  • Bowen R, Ducharme L, Shores D (1995). Stakeholders’ implicit claims and accounting method choice. Journal of Accounting and Economics, 20(3): 255–295

    Article  Google Scholar 

  • Burgstahler D, Dichev I (1997). Earnings management to avoid earnings decreases and losses. Journal of Accounting and Economics, 24(1): 99–126

    Article  Google Scholar 

  • Dechow P (1994). Accounting earnings and cash flows as measures of firm performance: The role of accounting accruals. Journal of Accounting and Economics, 18(1): 3–42

    Article  Google Scholar 

  • Dechow P, Kothari S P, Watts R (1998). The relation between earnings and cash flows. Journal of Accounting and Economics, 25(2): 133–168

    Article  Google Scholar 

  • Degeorge F, Patel J, Zeckhauser R (1999). Earnings management to exceed thresholds. Journal of Business, 72(1): 1–33

    Article  Google Scholar 

  • Foster G (1986). Financial Statement Analysis. 2nd edition. Upper Saddle River, NJ: Prentice-Hall

    Google Scholar 

  • Givoly D, Hayn C (2000). The changing time series properties of earnings, cash flows and accruals: Has financial reporting become more conservative? Journal of Accounting and Economics, 29(3): 287–320

    Article  Google Scholar 

  • Graham J, Harvey C, Rajgopal S (2005). The economic implications of corporate financial reporting. Journal of Accounting and Economics, 40: 3–73

    Article  Google Scholar 

  • Jacob J, Jorgensen B (2007). Earnings management and accounting income aggregation. Journal of Accounting and Economics, 43(2–3): 369–390

    Article  Google Scholar 

  • Kahneman D, Tversk A (1979). Prospect theory: An analysis of decision under risk. Econometrica, 47(2): 263–291

    Article  Google Scholar 

  • Nwaeze E, Yang S, Yin Q J (2006). Accounting information and CEO compensation: The role of cash flow from operations in the presence of earnings. Contemporary Accounting Research, 23(1): 227–265

    Article  Google Scholar 

  • Rayburn J (1986). The association of operating cash flow and accruals with security returns. Journal of Accounting Research, 24(3): 112–133

    Article  Google Scholar 

  • Roychowdhury S (2006). Earnings management through real activities manipulation. Journal of Accounting and Economics, 42(3): 335–370

    Article  Google Scholar 

  • Zhang R (2006). Cash flow management, incentives and market pricing. Working Paper, University of Colorado at Boulder

  • 姜 国华 (Jiang Guohua) (2004). 关于证券分析师对中国上市公司会计收益预测的实证研究 (Empirical research on analyst earnings forecasts to Chinese listed firms). 经济科学, (6): 72–79

  • 孙 铮, 王 跃堂 (Sun Zheng, Wang Yuetang) (1999). 盈余操纵与资源配置之实证研究 (Empirical research on earnings management and asset allocation). 财经研究, (4): 30–34

  • 王 亚平, 吴 联生, 白 云霞 (Wang Yaping, Wu Liansheng, Bai Yunxia) (2005). 中国上市公司盈余管理的频率和幅度 (Frequency and extent of Chinese firms’ cash flow management). 经济研究, (12): 102–112

  • 吴 联生, 薄 仙惠, 王 亚平 (Wu Liansheng, Bo Xianhui, Wang Yaping) (2007). 现金流量在多大程度上被管理了 (To what extent are cash flow being managed). 金融研究, (3): 162–174

  • 赵 春光 (Zhao Chunguang) (2004). 现金流量价值相关性的实证研究 (Empirical research on the value relevance of cash flows). 会计研究, (2): 29–35

Download references

Author information

Authors and Affiliations


Corresponding author

Correspondence to Ran Zhang.

Additional information

Translated and revised from Zhongguo Kuaiji Pinglun 中国会计评论 (China Accounting Review), 2007, 5(3): 381–400

Rights and permissions

Reprints and permissions

About this article

Cite this article

Zhang, R. Cash flow management in the Chinese stock market: An empirical assessment with comparison to the U.S. Market. Front. Bus. Res. China 3, 301–322 (2009).

Download citation

  • Published:

  • Issue Date:

  • DOI: