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Does Human Resource Investment for Internal Control System Enhance Future Cash Flow Predictability?

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  • Jaehong Lee

    (Division of Accounting/Tax and Management Information Systems, Kyonggi University, Suwon 16227, Korea)

  • Suyon Kim

    (Department of Accounting, Jeonbuk National University, Jeonju 54896, Korea)

Abstract

Generating positive long-term cash flow is vital for a firm’s sustainability. In this paper, we consider the earnings in the forecasting of future cash flow from a human resource investment of an internal control system. Using the firms listed in the Korea Stock Exchange market from 2014 to 2018, we find that the current earnings are the components of cash flow forecasting, and this relationship is genuine in a firm equipped with sufficient internal control personnel and their experiences. These findings indicate that earnings are reliable when forecasting future cash flow for a firm with a well-operated foundation.

Suggested Citation

  • Jaehong Lee & Suyon Kim, 2020. "Does Human Resource Investment for Internal Control System Enhance Future Cash Flow Predictability?," Sustainability, MDPI, vol. 12(20), pages 1-16, October.
    • Handle: RePEc:gam:jsusta:v:12:y:2020:i:20:p:8500-:d:428378
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    References listed on IDEAS

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    6. Il-Hang Shin & Ho-Young Lee & Hyun-Ah Lee & Myungsoo Son, 2017. "How does human resource investment in internal control affect audit reporting lag?," Asia-Pacific Journal of Accounting & Economics, Taylor & Francis Journals, vol. 24(1-2), pages 195-215, April.
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    Cited by:

    1. Suyon Kim, 2021. "Does Engagement Partners’ Effort Affect Audit Quality? With a Focus on the Effects of Internal Control System," Risks, MDPI, vol. 9(12), pages 1-17, December.

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