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The purpose of this paper is to review academic literature on prediction of firm's future cash flow, which is the fundamental issue in accounting and finance investigated under capital market-based accounting research. We begin by presenting the main findings regarding the important role played by earnings, cash flow from operations and accruals in predicting future cash flows followed by the methodology used. The findings from this literature show that the results are inconsistent with FASB assertion. Instead, most of the studies report that cash flow from operations is a better predictor of future cash flows, whereas some researchers support the assertion. However, other researchers have shown that the ability of earnings improved when it is disaggregated into its major accruals components. This inconsistency in the results was due to the following reasons; methodological differences; measurement error in the predictor variables and the period covered by the study. Overall the paper provides additional insight to readers who wish to familiarize with this line of research and provides possible areas for further research.

The study is based on companies that went through IPO on the Bombay Stock Exchange (BSE) and/or National Stock Exchange in the period 2011-2012. The paper applied a disclosure index comprising of 78 items to quantify the amount of information regarding intellectual capital included in the IPO prospectuses of Indian companies. The sum of disclosed score is divided by 78 to arrive at the index. For disclosure index content analysis is used. Multiple regression model and Correlation is used to examine the significance and association between disclosure index with independent variables. The main objective of this paper is to study the extent of intellectual capital disclosures in Initial Public offering (IPO) prospectus of Indian companies and also to examine the factors that influence the intellectual capital disclosure. The regression results reveal that of all the independent variables studied i.e. Board size Board independence Size Age Leverage Managerial ownership and Industry differences; Intellectual capital disclosure is influenced by industry differences. India is considered as knowledge economy and has highest contribution in gross domestic product from services sector wherein intellectual capital plays the most important role. As regards intellectual capital the studies have been insufficient. To our knowledge this is the first research on intellectual capital disclosures in IPO prospectuses of Indian companies.

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In the last two decades, accounting literature has focused increasingly on examining value relevance of accounting information. After the announcement of IFRS adoption, there has been a growth in the literature, which links value relevance of accounting information with IFRS adoption. This study aims to provide a brief literature and presents empirical findings. The purpose is to help future researchers to have the understanding of this nature of the study and identify gaps in the current literature. The article covered 90 empirical research papers published between 1993 and 2016 from various countries across continents, and the majority of them concluded that accounting information is relevant across continents before and after IFRS adoption, while few hold the opposite view. Few studies show no evidence in the improvement of accounting information after IFRS adoption.

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For accounting information to be useful for decision making it is essential that it is relevant for decision-making and should have a significant relation with stock prices or stock returns. Value relevance research aims to explain the impact of accounting information on stock prices or stock returns. This study examines the value relevance of earnings and book values on listed Indian pharmaceutical companies’ stock prices by using the Ohlson price model. The study gathered a series of panel data from 2006 to 2015 from the Nifty Pharma index. Ordinary least square and panel regression estimation were done using EViews. The findings provide sufficient evidence of those earnings per share (EPS) and book value per share (BVPS) jointly and individually for the Nifty Pharma index sample played an essential role in influencing stock prices. However, there is an insignificant decline in the combined value relevance of EPS and BVPS. The findings reveal that the EPS and BVPS played an important role in influencing stock prices. However, explanatory powers of EPS and BVPS in all years are significantly lower than that of developed countries. Overall findings show mixed results on the considerable influence of firm size on the value relevance of accounting information. This study’s findings have implications for analysts, investors, and other market participants; they should use EPS and BVPS in the equity valuation of pharmaceutical companies for better allocation of resources in capital markets.

This case study investigates multiple issues related to corporate governance, regulations, auditing and financial reporting of Infrastructure Leasing and Financial Services Limited (IL&FS). Combinations of these issues resulted in default in payment obligations by IL&FS in August 2018 originated from the agency problem. It posed a substantial systematic risk to the whole financial system of India. This case study highlights the severe drawback of concentration of decision-making and unprofessional work ethics at the senior management level. Further, the case study also provides the opportunity to discuss the inappropriate regulations and governance practices which cause a severe problem in long-standing and prominent organizations like IL&FS. Research Questions: (a) Discuss the vital role of corporate governance in major corporations and the reasons behind governance failures. (b) How did asset–liability mismatch create liquidity problems in a company which deals with long-term projects? (c) How does lack of a proper and unified regulatory framework for Non-Banking Financial Corporation (NBFC) harm investors’ interest? Link to Theory: This case study provides an opportunity to learn the role of corporate governance in NBFC. This case demonstrates the problems arisen because of agency problem and conflict of interest among real-world stakeholders. The case study also highlights the importance of assets–liabilities management in a strategically important organization like IL&FS. Phenomenon Studied: This case study attempts to understand the potential problems that occurred in IL&FS from the failure of good governance, lack of unified regulations for NBFCs and non-adherence of professional responsibilities by the external auditors. Case Context: The case study explores the vital role of the infrastructure development and financing companies in developing economies like India and how it may affect other vital entities of the financial system. Further, it demonstrates how unethical practices at senior management and lack of unified regulations can harm the organization. Findings: The research study found senior management’s potential involvement in unethical practices while managing the company. The financial statements did not reflect the true and fair picture of the entity, which misled investors and other stakeholders. It created chaos in the stock market, resulting in a loss to shareholders. The government set up a new board to restore the confidence of the stock market. Further, the government started to address the problems that arose. Discussions: The case of IL&FS by default, at first glance, looks like a case of asset–liability mismatch due to the lack of supervisory roles of the board and senior management’s massive regulatory failure. It is shocking how under the nose of regulators like Reserve Bank of India (RBI), Securities and Exchange Board of India (SEBI) and Ministry of Corporate Affairs (MCA) a default of this scale could take place. How could IL&FS group grow unchecked into a massive 348 entity. It appeared that regulators, marquee shareholders (banks and institutions), and the board of directors failed in their fiduciary obligation to regulate and supervise IL&FS.