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What is more relevant? A comparison of cash flows indicators versus profit or loss from listed European companies

2023-08-29Journal article Open access
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datacite.subject.sdg04:Educação de Qualidade
dc.contributor.authorVelez, Ana Rita
dc.contributor.authorPinto, Vera
dc.contributor.authorAlbuquerque, Fábio
dc.contributor.editorNtim, Collins G.
dc.date.accessioned2025-04-14T11:40:12Z
dc.date.available2025-04-14T11:40:12Z
dc.date.issued2023-08-29
dc.description.abstractThere is still controversy regarding the relevance of cash flow versus accruals. Relevant information can be assessed in multiple ways, including its value relevance and predictability. This paper then compares the value relevance and pre dictive value of accruals and cash flow measures to determine entities’ stock value and future cash flows, respectively. The data was obtained from 484 consolidated annual reports of 121 companies listed on Euronext between 2018 and 2021. Data assessment used a linear regression model. The findings suggest that cash flow measures have a more significant influence on stock prices than profit or loss (about 40% versus 20%, based on the models’ explanatory power). Furthermore, historical cash flows are proven to be a better predictor of future cash flows than profit or loss (90% versus 80%). Furthermore, neither accrual nor cash flow measures forecast future profit or loss significantly (below 35% in all cases). Findings also indicate a reduced capability of accrual or cash flow measures to forecast future profit or loss. This paper contributes to the ongoing debate on the relevance of cash flow versus accrual measures, which still presents differing conclusions. As part of its innovation, it compares profit or loss with multiple cash flow measures, such as non-GAAP measures and the concept introduced by the IASB in its exposure draft for operating cash flow. Additionally, the study examines the potential impacts and benefits of changes proposed in the IASB’s expo sure draft, including how they can affect stock prices and forecast future cash flows.eng
dc.description.sponsorshipInstituto Politécnico de Lisboa.
dc.identifier.citationAlbuquerque, F., Velez, A. R., & Pinto, (2023). What is more relevant? A comparison of cash flows indicators versus profit or loss from listed European companies. Cogent Business & Management, 10(3), 2251214. https://doi.org/10.1080/23311975.2023.2251214
dc.identifier.doi10.1080/23311975.2023.2251214
dc.identifier.issn2331-1975
dc.identifier.urihttp://hdl.handle.net/10400.21/21822
dc.language.isoeng
dc.peerreviewedyes
dc.publisherInforma UK Limited
dc.relation.ispartofCogent Business & Management
dc.rights.urihttp://creativecommons.org/licenses/by/4.0/
dc.subjectBusiness
dc.subjectManagement and accounting
dc.subjectBusiness & company law
dc.subjectRegulatory policy
dc.titleWhat is more relevant? A comparison of cash flows indicators versus profit or loss from listed European companieseng
dc.typejournal article
dspace.entity.typePublication
oaire.citation.issue3
oaire.citation.titleCogent Business & Management
oaire.citation.volume10
oaire.versionhttp://purl.org/coar/version/c_970fb48d4fbd8a85
person.familyNameAlbuquerque
person.givenNameFábio
person.identifier2083208
person.identifier.ciencia-id321C-4345-98A2
person.identifier.orcid0000-0001-8877-9634
person.identifier.scopus-author-id57192316632
relation.isAuthorOfPublication26fb9500-7aa0-4e26-85d0-9dac4a581202
relation.isAuthorOfPublication.latestForDiscovery26fb9500-7aa0-4e26-85d0-9dac4a581202

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