An investigation of users' perceptions concerning corporate funds flow information

The funds statement has been a frequent and often controversial topic of discussion in the financial literature since the early 1920's. This discussion reached a critical focus with the issuance of APB Opinion 19 in 1971. As the first authoritative pronouncement of any type to require presentation of a funds statement in the annual reports of business enterprises. Opinion 19 became the objective of intense scrutiny by the financial and academic community during the decade following its issuance. By the end of the decade the criticism directed at Opinion 19 resulted in a re-examination of the funds-reporting topic by the FASB.

The principal objective of this study was to provide current empirical data on the preferences of selected investors and creditors regarding the usefulness of various funds-reporting alternatives. The study's data were collected by means of a pretested mail questionnaire which was administered to a sample of chartered financial analysts and chief commercial loan officers. Nonparametric statistical techniques were employed in the data analysis.

Since the responses from chartered financial analysts indicated a nonresponse bias, the study's conclusions were derived exclusively from analysis of the returns of chief commercial loan officers. The study indicates that the provisions of APB Opinion 19 generally reflect the most useful methods of disclosing funds flows to chief commercial loan officers and that the usefulness of funds-reporting alternatives is not dependent on the particular funds concept selected by chief commercial loan officers as the underlying basis of the statement.