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Trapped Excess Cash as a Reporting Challenge
Author(s) -
Le Guyader Louis P.
Publication year - 2015
Publication title -
journal of corporate accounting and finance
Language(s) - English
Resource type - Journals
eISSN - 1097-0053
pISSN - 1044-8136
DOI - 10.1002/jcaf.22093
Subject(s) - business , cash flow statement , cash , cash flow , operating cash flow , currency , earnings , free cash flow , cash and cash equivalents , finance , monetary economics , accounting , economics
“Trapped excess cash” can give rise to reporting issues including the quality of earnings, tax reporting, foreign currency reporting, representations about “free cash flow,” and decisions related to investments in marketable securities and the allocation of “trapped excess cash” in corporate split‐ups. Increased vigilance is needed because every new management decision or reporting choice is an opportunity for a moral‐hazard stumble on the slippery slopes of corporate reporting, and after all, here we are dealing with cash—the “liquid” asset. © 2015 Wiley Periodicals, Inc.