*Investor Clienteles and the Information Content of Earnings and Cash Flows: Evidence from Mexico

• In Event: Information Content of Accounting Information

Abstract

We investigate the information content of earnings and cash flows in Mexico. Mexico provides a unique setting to test this relation because firms are allowed to issue different classes of equity shares to appeal to different investors. Share classes differentiate between investors based on nation of origin (domestic vs. foreign), voting rights, and cash flow rights. We hypothesize and find both earnings and cash flows provide incremental information, and earnings provide greater relative information, for the market as a whole. We also test this relation for each share class individually, and find that cash flows provide the greatest amount of information when investors are at the greatest risk of expropriation.

Authors

• Jose E Miranda-Lopez, University of Tulsa

• Isho Tama-Sweet, Cal State University - Fullerton