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.