Abstract:
The purpose of the study was to establish the effect of financing cash flow on stock return and to test the
moderating effect of discretionary accruals on the relationship between financing cash flow and stock return. Panel data was
collected from 29 listed non-financial firms at NSE for 12 years from 2007-2019. Fixed effect hierarchical regression analysis
showed that financing cash flow had a positive and significant effect on stock return while discretionary accruals negatively
moderate the relationship between financing cash flows and stock returns. The study concludes that financing cash flow
improves stock return, however, high discretionary accruals adversely reduce the effect of financing cash flow on stock return.
Therefore, the study recommends that NSE should enact incisive regulations pertaining to discretionary accrual practices and its
implication on stock return to protect investor vulnerability to losses in their investment due to managers’ opportunistic
behaviours.