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Accounting, Cash Flow and Value Relevance

2020-07-29 Business & Economics
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Release : 2020-07-29
Genre : Business & Economics
Kind : eBook
Book Rating : 886/5 ( reviews)

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Book Synopsis Accounting, Cash Flow and Value Relevance by : Francesco Paolone

Download or read book Accounting, Cash Flow and Value Relevance written by Francesco Paolone. This book was released on 2020-07-29. Available in PDF, EPUB and Kindle. Book excerpt: Although the concept “Cash is King” is today widely recognized, the cash flow statement was rather neglected until the EU accounting regulators discovered its relevance in explaining the real value of the business. This book investigates the value relevance of the operating cash flow as reported under the International Financial Reporting Standards (IAS/IFRS) for the largest European listed companies and US listed companies in the past recent years. Using the model based on the valuation theory developed by Ohlson, which measures the market value of equity as a function of accounting variables, the author concludes that operating cash flow represents a significant variable in determining the value relevance of the largest European and US listed companies. These findings provide siginificant implications for standard setters and support the continued requirements for disclosure of cash flow information under IAS 7.

Accounting, Cash Flow and Value Relevance

2020-09-25 Business & Economics
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Release : 2020-09-25
Genre : Business & Economics
Kind : eBook
Book Rating : 872/5 ( reviews)

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Book Synopsis Accounting, Cash Flow and Value Relevance by : Francesco Paolone

Download or read book Accounting, Cash Flow and Value Relevance written by Francesco Paolone. This book was released on 2020-09-25. Available in PDF, EPUB and Kindle. Book excerpt: Although the concept “Cash is King” is today widely recognized, the cash flow statement was rather neglected until the EU accounting regulators discovered its relevance in explaining the real value of the business. This book investigates the value relevance of the operating cash flow as reported under the International Financial Reporting Standards (IAS/IFRS) for the largest European listed companies and US listed companies in the past recent years. Using the model based on the valuation theory developed by Ohlson, which measures the market value of equity as a function of accounting variables, the author concludes that operating cash flow represents a significant variable in determining the value relevance of the largest European and US listed companies. These findings provide siginificant implications for standard setters and support the continued requirements for disclosure of cash flow information under IAS 7.

Information Asymmetries and the Value-relevance of Cash Flow and Accounting Figures

2010
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Release : 2010
Genre :
Kind : eBook
Book Rating : /5 ( reviews)

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Book Synopsis Information Asymmetries and the Value-relevance of Cash Flow and Accounting Figures by : Marc Steffen Rapp

Download or read book Information Asymmetries and the Value-relevance of Cash Flow and Accounting Figures written by Marc Steffen Rapp. This book was released on 2010. Available in PDF, EPUB and Kindle. Book excerpt: While some of the modern performance measures used in managerial accounting rely on cash flow based figures others try to take advantage of the information content of accounting figures. However, whether the additional information content in the accrual components of earnings improves the internal performance measurement is an open empirical question. To shed light on this question, I examine the correlation between operating cash flows and earnings with firm's total shareholder returns. Using fixed firm effects regression methods for a large sample of German listed firms covering some 5,000 firm years, the analysis shows that generally operating cash flow and earnings are both positively correlated with total shareholder return. However, with increasing information asymmetry earnings become less correlated with the firm's stock market performance and operating cash flows dominate earnings in explaining total shareholder return (and vice versa). These results suggest that, the information content of accounting figures is only relevant in settings characterized by low information asymmetries and, thus, there is no one-size-fits-all performance measure for managerial accounting purposes. -- Accounting figures ; performance measures ; total shareholder return ; managerial accounting

Which is More Value-Relevant

1998
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Release : 1998
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Book Synopsis Which is More Value-Relevant by : Ervin L. Black

Download or read book Which is More Value-Relevant written by Ervin L. Black. This book was released on 1998. Available in PDF, EPUB and Kindle. Book excerpt: Statements in the financial press and recent research suggest that controversy exists as to which accounting measure is more value-relevant: earnings or cash flows. This study examines the relative value-relevance of earnings and cash flow measures in the context of the firm life-cycle. Earnings are predicted to be more value-relevant in mature stages. Cash flows are expected to be more value relevant in stages characterized by growth and/or uncertainty. In general the hypotheses are supported using Wald chi-square tests (Biddle, Seow, and Siegel 1995) of the Edwards, Bell, Ohlson (1995) model. Evidence supports the hypothesis that earnings are more value-relevant than operating, investing, or financing cash flows in mature life-cycle stages. However, in the start-up stage investing cash flows are more value relevant than earnings. In growth and decline stages, operating cash flows are more value relevant than earnings.

Value Relevance of Book Value and Earnings

2016
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Release : 2016
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Book Synopsis Value Relevance of Book Value and Earnings by : Mohd Halim Kadri

Download or read book Value Relevance of Book Value and Earnings written by Mohd Halim Kadri. This book was released on 2016. Available in PDF, EPUB and Kindle. Book excerpt: This study aimed at investigating the value relevance of book value and earnings and the relationship between earnings and operating cash flow of two different financial reporting regimes in Malaysia. A market and non-market valuation approaches were utilised for that purpose. The result of market valuation approach of pool sample shows that book values and earnings are value relevant. We also observed that the change in financial reporting regime affects significantly the value relevance of book value and but not earnings. While book value and earnings are value relevant during the MASB period, only book value is value relevance during the FRS period. The result of non-market valuation approach on the other hand, shows that the change in financial reporting regime has no significant effect on the relationship between earnings and operating cash flow. The result of market valuation approach implicates that the introduction of new or improved standards under FRS regime strengthen the position of book value thus leaving earnings behind in equity valuation. The result of non-market valuation model implicates that the level of relationship between earnings and operating cash flow persists as long as operating cash flow comprise of cash and cash equivalent components whereas earnings comprise of cash and accruals components. The study contributes to the existing literature in the area of the effect of adoption of FRS on value relevance of accounting numbers in Malaysia.

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