Accounting, Cash Flow and Value Relevance

verfasst von: Assoc. Prof. Francesco Paolone

Verlag: Springer International Publishing

Buchreihe : SpringerBriefs in Accounting

Enthalten in: Springer Professional "Wirtschaft+Technik" , Springer Professional "Wirtschaft"

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Über dieses Buch

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.

Inhaltsverzeichnis

Frontmatter

Chapter 1. Introduction

Abstract

The main goal of accounting and financial reporting is to assist investors in making economic decisions, including assessing the value of firms in which they have invested (Barth et al. 2005) following the shareholder value approach.

Francesco Paolone

Chapter 2. The Cash Flow Statement Under IAS/IFRS

Abstract

Many jurisdictions have obliged the disclosure of a Cash Flow Statement as a separate quantitative report of the financial statements (Akbar et al. 2011). In the USA in 1973, the Financial Accounting Standards Board (FASB) specified rules that made it mandatory under Generally Accepted Accounting Principles (US GAAP) to disclose sources and uses of funds, but the definition of “funds” was not clear.

Francesco Paolone

Chapter 3. The Historical Background of Cash Flow Statement: First Evidences and Contributions

Abstract

In the past, the Cash Flow Statement has always been an accompanying document to the traditional financial statements, acting as a stand-alone document with the aim of highlighting the level of liquidity and solvency, which is of particular importance for those outsiders who have provided capital.

Francesco Paolone

Chapter 4. The Value Relevance of Accounting Information and Cash Flows: A Review of Prior Studies and Models

Abstract

The contributions of “value relevance” can be collected from macro-area of earnings quality studies, i.e., those studies aimed at appreciating the quality and usefulness of financial statements and related accounting information.

Francesco Paolone

Chapter 5. Data Analysis on EU and US Listed Companies

Abstract

Companies prepare Cash Flow Statements according to the accounting standards requirements. A broad discussion has been raised regarding its usefulness to companies for investors. The big issue to be addressed is: What about the importance of cash flow from the investors’ perspective, specifically, the reflection of operating cash flow (OCF) information content on a company’s market value?

Francesco Paolone

Chapter 6. Concluding Remarks: The Importance of Cash Flow Statement

Abstract

The most important element of the Cash Flow Statement is not the change in a stock financial resource between the beginning and end of the period, which can be found in the balance sheet, regardless of the financial resources that are referenced (cash or net working capital), but, rather, it is represented by the individual types of change and related causes (Allegrini et al. 2014).

Francesco Paolone

Backmatter

Titel: Accounting, Cash Flow and Value Relevance
verfasst von: Assoc. Prof. Francesco Paolone
Verlag: Springer International Publishing
Electronic ISBN: 978-3-030-50688-9
Print ISBN: 978-3-030-50687-2
DOI: https://doi.org/10.1007/978-3-030-50688-9